New ELD deadline: Will it trigger a capacity crisis?

Posted: 20 Mar, 2019 by Donald Broughton


26 Comments

Categories: Trucking Industry Trends

Tags: BrokerCarrierOwner-OperatorShipper


Freight markets were upended by the capacity crunch that followed the electronic logging device (ELD) mandate in December 2017. The next phase of the mandate begins in December 2019, and it may end up being just as disruptive.

The new milestone expands the regulation in two dramatic ways:

1. No more AOBRDs

The ELD requirement becomes more stringent in December. Fleets will no longer be allowed to deploy the Automatic On-Board Recording Devices (AOBRDs) that were "grandfathered in" for the first two years of the ELD mandate. Carriers with AOBRDs were considered compliant, but now they'll need to switch.

The biggest difference is that ELDs must include devices that are "intrinsically integrated" into the truck’s operating system. Some AOBRDs were cell phone apps that didn't plug in, and those will soon be non-compliant, including many of the legacy systems from companies we all think of as the dominant players in the industry. I estimate that more than 50% of the 3.5+ million Class 8 trucks now in commercial use will be required to replace or significantly upgrade the ELD system they are currently using. That could force some big changes in driver behavior and in fleet operations.

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ELD photo courtesy of KeepTruckin

 

2. Smaller trucks are included

The ELD mandate has always included every trucks in commercial use, not just Class 8 semi-trailers. Class 3 through Class 7 are also covered, including FedEx, UPS, and Amazon delivery trucks, as well as your local utility and plumbing contractor. When they travel 100 miles or more from their home terminal, they'll all need to have an ELD device that meets the more stringent requirement of being intrinsically integrated into the truck’s operating system. Until now, if a delivery driver maintains an electronic log, it is almost always on a cell phone or other device that is not intrinsically integrated.  There are more than 3.7 million of these trucks in commercial operation, and I estimate that more than 60% of them will need to install a compliant ELD or risk being fined whenever they travel more than a couple of hours from home.

 

Will the new ELD deadline cause another capacity crisis?

The answer is a definite maybe.

Back in 2017, there was a full-on panic in the industry about the ELD mandate. I was one of the few who predicted that the mandate wouldn't have a lasting impact on freight transportation. I reasoned that the mandate was well publicized and the industry had ample time to prepare for it. As it turns out, I was right. There was some disruption in early 2018, to be sure, and a short-term impact on rates. By the third quarter of 2018, however, most fleets had adapted to the new technology, and the end result was not as dramatic as expected. 

This time around, however, the mandate will be extended to an even larger population of trucks. The upside is that the improved technology will eventually lead to an even more efficient marketplace. But in the short term, there's still one very big problem. No one is talking about it. A surprisingly large percentage of the industry is unaware of the looming change in ELD requirements. As a result, no one is making plans to address it. 

As a friend said on the eve of the Y2K "crisis" in the computing world: "Calamity well anticipated, seldom is, but calamity not anticipated can be a disaster."

 

Guest opinion by Donald Broughton, Principal and Managing Partner of Broughton Capital. Mr. Broughton is a financial analyst with decades of experience in the transportation industry. Contact him at donald@broughtoncapital.com.

 

Leave your comments

  • profile

    Manny

    • 3/20/2019 5:36:33 PM

    More efficient market place? Shippers and receivers will not change how slow they load or unload and detention rates will stay low. I personally have not seen a change in how fast shippers or receivers work on my trucks...especially reefers and have seen detention rates decline in the past year. Brokers have told me if you don't like the detention rate then do not take the load. You cannot force a customer to pay you detention all you can do is just stay away from their loads but in the current market sometimes you have to take the loads with bad shippers. There needs to be a standard for detention that everyone needs to follow otherwise nothing will change.

    Reply 9 comments
  • profile

    Ben Kowalski

    • 3/21/2019 8:28:11 AM

    As you stated the first ELD deadline did not cause lasting change in the industry. The panic surrounding the implementation date is what caused chaos and allowed rates to jump drastically. And most of it was related to the segmentation of the industry. Shippers had no leg to stand on negotiating rates in line with historic pricing, because carriers had large leverage. And that leverage turned out to have almost no impact on carrier efficiency. I believe that if the 2nd deadline is as widely publicized with the same corresponding fear as the first; it will likely cause larger disruptions than the actual implementation of stringent drive times.

    Reply 
  • profile

    Brian

    • 3/21/2019 8:45:12 AM

    In reading the above, will that also apply to sprinter vans and straight trucks under 10,000 lbs.?

    Reply 1 comment
  • profile

    Parteek

    • 3/21/2019 9:12:41 AM

    It will lead to efficiency ? I don't know how you office folks think but get out there drive and see how efficient it has become with ELD's. ELD mandate is a corporate lobbied law that we as small carriers have to follow. Shippers and Recievers still live in 70's and 80's and take hours to load and unload. Example : An old car cannot be called effiecient and new with only changing the tires. It will need new engine transmission and a lot more !

    Reply 
  • profile

    R L Lyles

    • 3/21/2019 11:00:41 AM

    Plainly put, claims of increased efficiency by the implementation of the ELD Mandate are blatant lies. The companies that already had the infrastructure in place (also the biggest supporters of the mandate) saw a revenue increase due to independent truckers no longer hauling as much freight. That is not efficient "industry wide". The additional cost imposed on independent truckers does not reflect more "efficiency". The increased number of trucks operating in a drop & hook operation (look at a list of ATA members) does NOT reflect increased "efficiency" on an industry wide basis. Of course, I wouldn't expect any contributing writers to the above entity to have any other opinion. Based on the profit made from the ELD advertising, it doesn't make sense for there to be an honest assessment given. After all, that wouldn't be "efficient"................

    Reply 
  • profile

    Henry Big Boy

    • 3/21/2019 4:07:07 PM

    More efficiency? What world are living in sir? I'm an OO who used to steady roll at 63 to 65 MPH. Never had an accident, nor citation, never late for a pick up, or delivery for as long as I've been in business ( 13 Years OTR). Come Dec. 2019, you better get out of my way, because I won't be able to guarantee your safety at 75-80 MPH. Great job FMCSA, you're a beacon of light in times like this.

    Reply 1 comment
  • profile

    Rick

    • 3/22/2019 12:42:03 AM

    The only efficient effect of this mandate was to pull more money out of the pockets of truck operators and into the eld providers nothing more. Rates haven't increased, loading/ unloading times haven't decreased and only the big fleets can really take advantage of the hrs of service rules due to their size and asset deployment capabilities. We small timers were shafted by this mandate & now on top of all we have to deal with on the road, we now have to get into the politics of things by writing and calling our representatives....."sigh" ....Hopefully some higher ups can help but I doubt it even in Trumps MAGA era.

    Reply 
  • profile

    David S. Krouse

    • 3/22/2019 12:30:41 PM

    Whoever is not getting their detention rate spelled out in writing on the rate con and/or addendum will get exactly what they deserve. Don't let them tell you that $50/hr is "industry standard". That's a bold faced lie. Each and every truck on the road should be billing a MINIMUM of $100/hr. Period! If you aren't then I'm afraid your business is doomed to fail in today's times.

    Reply 
  • profile

    Duane claycomb

    • 3/22/2019 3:58:17 PM

    This is a joke nobody else in this country has to wake up an worry about getting fined an losing a weeks worth of wages for not doing what law enforcement agents see right or wrong!!!Maybe if oida would stop saleing out to Washington an big companies merging trying to monopolize the industry we wouldn't be in this mess!!Bottom line truck drivers are more than blue collar we do a job nobody else wants or for that matter can handle an it's time drivers took a stand an actually wake these people up without us this country stops in 24 hour just a little food for thought!!!

    Reply 2 comments
  • profile

    Ricky P

    • 3/24/2019 11:37:37 AM

    With many AOBRD's drive time is adjustable. With ELD it's not. And there is a huge problem.

    Reply 
  • profile

    George

    • 3/28/2019 7:20:12 AM

    I love how the freight community thinks that 2018 was just a fluke. Article after article I read thinks that freight will never return to the capacity crisis we had in 2018. Yea right! It will be back stronger then ever as soon as President Trump works out a trade deal with China. And I can’t wait. You call me to move my truck you better get your wallet out. Cause it’s going to be expensive!!

    Reply 
  • profile

    MS. M

    • 3/28/2019 8:19:23 PM

    RATES HAVE DROPPED AND KEEP DROPPING AND BIG BROKERS GET BIGGER AND BIGGER, IN MY EXPERIENCE THUS FAR, ELDs HAVE NOT HELP NO ONE BE SAFER ON THE ROAD, IT HAS CAUSED MORE STRESS TO THE DRIVERS, DISPATCHERS AND ITS AFFECTING THEIR HEALTH AND THEIR PAY AND THEIR QUALITY OF LIFE AND THEIR FAMILIES. IF THE LOADS WOULD PAY SUFFICIENT THEN IT WOULD BE ENOUGH TO ONLY DO 2-3 LOADS IN 7 DAYS WITH AN ELD AND MAYBE AFFORD TO PAY YOUR BILLS AND STILL HAVE ENOUGH LEFT TO PAY HIGH INSURANCE RATES AND MAINTENANCE YOUR TRUCK AND TRAILER. BUT THAT IS NOT THE REALITY OUT HERE AND I AM TIRED OF READING IGNORANT ARTICLES WRITTEN BY BIAS WRITERS WHO DONT REPRESENT THE REAL TRUTH OF WHAT SMALL OPERATORS ARE FACING TODAY. PLEASE INTERVIEW A POOL OF OWNER OPS AND DO YOUR RESEARCH BETTER, FAIR AND ETHICAL AND PRESENT THE REAL FACTS OF WHAT IS TRULY GOING ON OUT HERE. AND LETS NOT EVEN WASTE OUR TIME IN MENTIONING DETENTION BECAUSE THAT DONT EXIST IN TRUCKING AND NO ONE IS HOLDING SHIPPERS/RECEIVERS ACCOUNTABLE IN THAT AREA; LOADING/UNLOADING TIMES AND THAT IS WHERE TRUCKERS LOSE MOST OF THEIR WORK HOURS BECAUSE THAT IS THE "UNCERTAIN" PART OF OUR DAY---HOW LONG IS THE SHIPPER / RECEIVER REALLY GOING TO TAKE TO LOAD / UNLOAD TODAY?? AND BROKERS EXPECT YOU TO DONATE 2-4 HOURS FOR FREE OF YOUR WORK DAY. BUT THE GOVT SAYS " WE ON DUTY WORKING" SO THEN WHY THEY LET BROKERS AND SHIPPERS/RECEIVERS GET AWAY WITH NOT PAYING FOR THOSE ON DUTY HOURS?? WHY IS NO ONE ADDRESSING THAT!!!!!

    Reply 
  • profile

    Orlando

    • 4/2/2019 8:59:34 AM

    Very simple if I don’t make money I sell the truck or parked, as of today we are working for pennies, this is socialism at it best where corporations work together with the government to screw the middle class guy, at the end they want us to drive for a company as slaves, not me, I will find another line of work, for those who plan to stay, I’m sorry for you.

    Reply 
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