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ELD Mandate the Right Thing, Despite Pain of Change

By Ward Richmond, EVP, Colliers International

Ward Richmond, EVP, Colliers International

In December 2015, the Federal Motor Carrier Safety Administration (FMCSA) announced the Electronic Logging Device (ELD) Mandate, which requires all commercial motor vehicles to be equipped with government-certified ELDs in an effort to enforce accurate hours-of-service (HOS) recordings. In December 2017, this new mandate officially began, and our highways and byways are in turn safer.

Government officials, trucking industry executives, and truck drivers agree that electronically logging the activities of truck drivers is going to save lives and improve safety on our roadways. In an April 2018 survey by Zipline Logistics, a 3PL, 61 percent of respondents felt safer because of the mandate. In addition to improved safety, the FMCSA has also projected other benefits, including increased productivity and substantial cost savings.

The FMCSA estimates that the ELD mandate will potentially save $2.44 billion by acting as a personal time-management tool for drivers. Senior-level executives in the transportation industry have confirmed that the ELD Mandate will improve efficiency and accountability. The use of ELDs drastically improves trucking companies’ collective ability to measure Location, Utilization and Speed of equipment in addition to accurately tracking drivers’ HOS. All of this data can then be aggregated, analyzed and used to improve efficiencies in the market.

To quote Peter Drucker, “You can’t manage what you don’t measure.” While truckers may not realize these savings immediately, this new process for measuring drive time and equipment usage will undoubtedly create substantial cost savings via improved process efficiencies, automation and route planning.

The FMCSA promotes that the ELDs should save over $1.6 billion in paperwork alone. Furthermore, projections show that ELDs will create further savings through decreased fuel costs, reduced downtime and fewer accidents. Additionally, the data collected by ELDs can later be utilized to help build the database necessary for future automated vehicles.

But, as with all laws and mandates, the ELD requirement has downsides for the transportation and logistics industry and ultimately for consumers’ pocketbooks.

One of the largest impacts of ELDs is their role in increasing transportation costs. Distributors are feeling the impact of ELDs forcing truckers to limit their HOS, thereby increasing transportation costs. Seventy-one percent of participants in the Zipline survey noted that rates were up since the mandate went into effect. Multiple distributors are reevaluating the impact that these restrictions will have on their transportation costs, and there has already been a shift in supply chain real estate to additional, smaller distribution centers versus fewer, larger distribution centers in a calculated effort to offset these expected costs.

Because HOS is more strictly recorded in ELDs, long waits while receiving or delivering a load significantly cut into productivity. These wait times cost money, an estimated $1,281 to $1,534 per year for each driver, according to a Department of Transportation audit. With application of the better analytics, distributors can adapt to reduce the wait times for drivers, allowing for greater efficiency and higher earnings.

"The use of ELDs drastically improves trucking companies’ collective ability to measure Location, Utilization and Speed of equipment"

The majority of large corporate carriers such as FedEx, UPS and YRC Freight have already been “playing by the rules” related to federal HOS policies. The impact of the new mandate will not be as harsh for these 10,000-pound gorillas versus the effect on their smaller peers and non-corporate competitors. In fact, the greatest impact of ELD implementation is on the smaller trucking companies and independent operators.

With a general lack of federal enforcement in HOS regulations, many smaller trucking operations have been accused of stretching drive times to improve margins and profitability. In a survey by DAT Solutions, 67.3 percent of truckers said that they were driving fewer miles since the ELD mandate. The smaller, less corporate operators that have not been strictly adhering to HOS policy will be in trouble, and it will not be surprising to see some of the smaller trucking operations stop their engines.

The final burden of the new law is that it will undoubtedly add more fuel to the fire of the driver shortage dilemma, which has plagued the trucking industry for the past several years. Some truckers threatened to quit the industry because of the mandate, and 84 percent of respondents to the Zipline survey said that morale was down overall.

As the truck-driving population continues to age, trucking companies have had a progressively hard time finding replacements to fill the shoes of these retirees. With such high demand for workers across the U.S., truck driving is becoming a less popular choice as individuals opt to work in more stable environments, without having to drive for long hours and face significant time away from their homes. Additional regulations like the ELD mandate will exacerbate the driver shortage.

The ELD mandate causes trucking industry executives and drivers alike to forcefully nod their head yes, but simultaneously wince from the pain. Electronically logging travel and managing truckers’ schedules will reduce fatigue, thereby improving safety on the roads. Safety is the primary value proposition behind the mandate, and this law is going to save lives. The FMCSA predicts that the ELD mandate will prevent 20 fatalities and 434 injuries per year. That is incredible. ELDs are undoubtedly the right thing to do, and it is difficult to argue otherwise.

We are living in the digital era, and the trucking industry is finally catching up. It will be interesting to see the changes caused by the ELD mandate. While some companies will need to change their business plans to remain profitable and hiring drivers will continue to be the largest thorn in the side of the trucking industry, the benefits of increased efficiency, productivity, cost savings and above all safety will likely solidify the ELD mandate as a breakthrough into the future for the somewhat archaic trucking industry.

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