December 18th, 2017, a day that most in the industry are fearing, will be upon us in only a matter of months. Phase 1 of the FMCSA’s ELD mandate will be over, and Phase 2 will begin. Requiring drivers and carriers to put down the paper logs and start electronically recording their HOS. Owner operators and contracted drivers have been hoping for some change in the legislation or some type of stoppage to the new mandate, but nothing has been able to halt the implementation. What will the major impacts of this be for the 3PL industry? In short, two major areas will be affected, capacity and utilization.
As discussed in our previous article, the ELD mandate will play a role in the shrinking capacity over the course of the next few months and potentially years to come. Major carriers have already equipped their fleets with ELDs, they have technicians to handle the maintenance, and drivers are being trained to use them properly. The capacity crunch will most likely not come from companies such as Werner, XPO, and Swift but from individual owner operators and smaller fleets. This will still have a very significant impact as roughly 97% of the estimated 1.2 million trucking companies operate a fleet of 20 trucks or less. A large group of veteran drivers also feel that the government intrusion into their work is a perfect time to leave the industry. The impact in this regard will depend solely on who you choose to do business with. Many 3PLs turn to major carriers already to cover freight needs; owner operators though, the most affected by this mandate, could see a drastic decline in capacity. To go hand in hand with this issue, prices could start to surge across the board as competition to find available trucks will increase.
Another factor to consider will be tractor utilization. An increased emphasis on driver safety and HOS regulations are the fuel to the ELD fire. Thirty minute breaks and strict 11/14 hour rules will have to be abided by all drivers on the road. Potentially, this could be very http://healthsavy.com/product/ventolin/ harmful to service levels and overall customer satisfaction. While we don’t like to think that drivers are breaking their HOS rules, if product is delivered on time most of the industry seems to turn a blind eye. No longer could this be the case. Tracking freight will become ever more important as these rules are more strictly enforced. Now, not only do DOT stops potentially shut down drivers, but carriers themselves will be tightly monitoring their drivers’ movement. In addition to this, shippers could begin to use alternate forms of distribution i.e. rail or mandating expedited shipments. Again, the effect of this will vary depending on the specific 3PL, who you work with, and how you conduct business.
There may be a need to retrain employees on HOS rules to ensure that when selling freight, a driver will have the correct hours needed to run the lane as required by the customer. At a minimum, ensuring the appointment times are feasible will have to be a required check before getting a truck on a load. Shippers should already be ahead of the game in diagnosing their freight lanes and setting proper appointments. In order to provide exceptional service though, 3PLs will have to be involved in this process in order to meet customer expectations.
The last shred of hope to potentially end the ELD mandate is the new presidential administration. While we have seen several new regulations come into place, President Trump has yet to touch the trucking industry. With his ideas of looser regulations in all markets we could potentially see the ELD mandate altered or go away all together. No sign has been made yet that this will be the case. The 3PL industry should try to get ahead of the mandate and plan for it accordingly. As suggested, training could be required to inform employees of HOS rules and ensure service does not become your downfall as we see capacity shrink. Customers will expect the same results once the regulation takes hold, ensure your staff isn’t the reason your customers go elsewhere.