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Transport Canada Analysis Shows 2:1 Benefit to Cost Ratio for ELD Mandate

Momentum continues to build towards the implementation of a federal ELD mandate in Canada. Late yesterday, Transport Canada released its long-awaited Cost-Benefit Analysis (CBA) for a proposed mandate that would apply to all federally-regulated vehicles where the driver is currently required to complete a paper logbook.

The CBA looked at two scenarios: One included all federally-regulated commercial motor vehicles in Canada that would be covered by the mandate while the other excluded those vehicles which would be covered by the US mandate. In both cases the result was the same. Benefits are expected to exceed the costs associated with a Canadian ELD mandate by a 2:1 ratio.

ELD_Table

According to the CBA “ELDs are an effective compliance tool to reduce the potential for driver fatigue and the likelihood of a driver reporting incorrect data on a paper log book … (and) are expected to improve road safety by increasing the accuracy of tracking driving hours (to ensure that allowable driving hours are not exceeded) and reducing potentially high-risk situations whereby drivers may operate in a fatigued state.”

The sidebar table provides a summary of the Transport Canada findings and conclusions. A full copy of the CBA is available to CTA members by emailing ctaeldfeedback@184.107.41.75 .

The net benefits will accrue to drivers, carriers and to government with the CBA suggesting that among the total benefits, savings to industry, including both drivers and motor carriers, account for 99% of the benefit.

“The CBA provides a sound analytical basis that confirms the significant net benefit from an ELD mandate and dispels some of the myths about ELDs that are out there,” says David Bradley, CEO of the Canadian Trucking Alliance, which has been championing such a requirement since 2005. “Now that the federal government has made its path clear, we call on all provinces to get onboard and extend the mandate to provincially-regulated vehicles as well.”

The compliance date for the United States’ ELD mandate is December 2017, with grandfathering provided for qualifying technology until December 2019. The exact phase-in period and dates for compliance with the Canadian federal ELD regulatory proposal has not been established. In the CBA, Transport Canada says that it wishes to align with the United States to the extent possible. However, it also says “regulatory amendment is expected to come into force in year three (2 years after publication of the final regulation)”.

During the course of the CBA, a one-year transition period was considered but showed a significant cost increase. CTA supports the two-year phase-in, plus an additional two-years grandfathering for qualifying equipment. It is expected Transport Canada will kick off the formal regulatory process with a Canada Gazette Pt. 1 notice as early as Spring 2017.

Some interesting facts and assumptions based on various sources and years contained in the CBA include:

Basic Industry Data

  • GDP from Canadian transportation services totals about $58 billion, or about 3.7% of total GDP, with trucking accounting for the largest share of the transportation total at 30.7%
  • 83.2% of shipments transported by Canadian trucks are domestic, with the remainder being cross-border shipments to or from the US and Mexico
  • Trucks transport 45.1% of Canadian exports to the US (by value) and 73.5% of US imports
  • The total Canadian trucking industry (for-hire, private, owner-operator and courier) includes about 56,800 firms
  • Small trucking carriers (100 or fewer employees) represent 98.7% of all carriers

Trucks

  • There are about 750,000 heavy trucks operating in Canada (defined as any truck over 4500 kg)
  • About 80,000 Canadian CMVs operate into the United States on a regular basis
  • The trucking fleet will grow at an annual rate of 3.1% over the next 5 years
  • The average life span for a power unit where driver would maintain logbook is 6 years
  • The average annual cost per CMV is estimated at $355,000 based on annual travel distance of 100,000 km at the cost of $3.55 per km

Drivers

  • There are 1.2 drivers for every truck
  • The industry employs about 201,108 company drivers and there about 54,000 owner-operators
  • The overall turnover rate for truck drivers in Canada is 6.7%
  • A wage rate of $30 per hour for truck drivers is assumed including an overhead rate of 25%
  • About 170,400 truck drivers will be covered by the mandate

Trucks Covered by ELD Mandate

  • There are 170,000 federally-regulated trucks operating in Canada
  • About 84.5% of for-hire trucks are equipped with fleet management systems with ELD capacity and 56.5% have operational ELDs
  • 30% of the ramp up for the mandate will be completed in 2016 and 70% in 2017 due to US rule
  • On average, the proposed regulation would cost $1,193 per year for a small carrier versus $46,685 for a large carrier

ELD Costs

  • ELDs at an entry or mid-level range from $300 to $900 per unit
  • Likelihood that mobile ELD applications could push the costs down even further
  • Associated installation cost is $220 per device and activation fee is $15 per unit
  • Monthly monitoring service fee is estimated to be $30 per month
  • Average driver training costs $48 per hour
  • Average inspector/auditor training is about $457 per person

Savings from ELDs

  • Driver time savings from maintaining paper log books estimated at 4.5 minutes to 23 minutes per day
  • Time spent forwarding daily logs by drivers to carriers will save about 5 minutes about 25 times per year
  • In total drivers will save about 20.08 hours per year currently being spent administering paper logs
  • Clerical employees take about 3.5 minutes to file each paper log received from each driver

Road Safety/HOS Compliance/ELDs

  • Motor vehicle collisions were the cause of 1,923 deaths and 165,306 personal injuries; 226 fatalities and 4,512 injuries involved a semi-truck
  • Although police reports tend to estimate the contribution of fatigue at below 5% of crashes, there is established consensus amongst the world’s leading experts in the field that fatigue is more likely responsible for about 15% to 20% of crashes
  • 300 (all types of vehicles) crashes occur in Canada each year where fatigue or falling asleep is a contributing factor and this is likely understated
  • It is estimated that 42 such crashes involving the 146,300 (Outcome 1) federally-regulated CMV operators subject to an ELD mandate occur annually and 19 under Outcome 2
  • A 10% effectiveness rate in reducing these types of crashes is assumed
  • Percentage of drivers/carriers exceeding allowable HOS limits is estimated at 5% to 10%

Inspectors/Auditors

  • There are about 1,052 roadside inspectors in Canada with an average of 282,587 daily log inspections conducted in Canada each year
  • There are about 102 auditors with 1,166 facility audits completed annually
  • Of the total inspections, it is estimated about 102,156 annual inspections correspond to the in-scope CMVs in Outcome 1 and 44,828 for Outcome 2
  • It is estimated 976 audits are conducted annually of the 146,300 in-scope CMVs or Outcome 2 and 428 audits of the 64,200 in-scope CMVs for Outcome 2
  • Hourly wage rates of inspectors and auditors are $57 and $58, respectively

Check out CTA’s ELD white board tutorial below:

 

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