The year 2020 is hyped up to be a year of new challenges and regulations for both carriers and shippers alike: changes in hours of service, rising diesel prices and looming legislation.
Changes in Hours of Service
After consideration, the FMCSA wants to adjust drivers’ hours of service (HOS) rules. These coming changes will be part of an overhaul and modernization of the HOS rules that govern nearly every truck driver on the road.
The adjustments would generally happen in five areas: flexibility in the mandatory, 30-minute rest break after eight hours of driving; allowing a split-sleeper berth exception; allowing one 30-minute off duty break during a driver’s 14-hour on-duty time; flexibility in bad weather; and changes in short-haulers’ HOS exceptions.
Any proposed changes in on-duty or driving time are sure to be met with mixed emotions from carriers, owner-operators, 3PLs, and more. Drivers are paid by the mile rather than by the hour, meaning any reduction in miles driven can be an immediate hit to a driver’s bank account.
Diesel Prices Set to Rise in 2020
A mandate that requires maritime vessels to burn cleaner fuel is projected to put upward pressure on diesel prices next year, leaving many transportation experts concerned about how the change will affect the supply of diesel fuel for trucks.
According to a March 27 report from the U.S. Energy Information Administration, in 2020 the price of diesel could be as much as 20 cents a gallon more expensive than today’s price. The International Maritime Organization set a Jan. 1, 2020 deadline for cargo and cruise ships in certain stretches of open water to switch from so-called “No. 6” fuel oil — commonly called bunker fuel— to cleaner-burning diesel fuel as a main reason for this price hike.
“The change in sulfur limits has wide-ranging repercussions for the global refining and shipping industries as well for petroleum supply, demand, trade flows and prices,” according to the EIA. “EIA anticipates that the effects on petroleum prices, will be most acute in 2020, and the effects on prices will be moderate after that.”
Increases to Minimum Insurance Coverage
Introduced into the United States House of Representatives on July 16, 2019, the bill titled “Improving National Safety by Updating the Required Amount of Insurance Needed by Commercial Motor Vehicles per Event (INSURANCE) Act of 2019” can have an immense impact on the trucking industry as a whole, particularly owner-operators and small fleets.
This bill aims to increase the minimum level of insurance required for motor carriers transporting property. The original insurance mandate was written in 1980 and stated that costs would be reviewed and accessed over time, and of course, medical expenses have skyrocketed since 1980.
Obviously, capacity will be key to how quickly and how high truckload rates rise in the coming years. The U.S. truckload market saw drastic decreases throughout most of 2019 as economic growth slowed, and an abundance of new trucks ordered in 2018 began to arrive in motor carrier yards. At the same time, hopeful signs are appearing — U.S.-China tariffs appear to be getting sorted out and a new trade agreement vital to trucking is on the horizons. Despite the nearer-term outlook, equipment suppliers continue to invest for better times.
While it is still unclear what the new year will bring in regard to rates, the coming months should give us a more accurate indication of what’s ahead. Truck rates are affected by many market factors, but experts have said that they feel certain 2020 isn’t going to be another bull market like 2018, nor is it likely to repeat the volatility of 2019.