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JOC: ELDs to Drive Supply Chain Gains, Benefit Drivers & Shippers

A final rule requiring all interstate commercial truck drivers to use some type of electronic logging device (ELD) to comply with  hours of service is expected at the end of September.

In the short-term, the number of available trucks and drivers could drop as the rule as non-compliant carriers exit the industry. But in the long haul, expanded use of e-logs and onboard computers, combined with other technologies, will help carriers of all different sizes and shippers unlock truck capacity, explains the Journal of Commerce in a recent article.

While a near-term capacity crunch as a result of ELDs could send truckload rates higher as pricing power decisively shifts to carriers, JOC explains that over time all links in the supply stand to benefit as efficiencies realized from ELDs’ connectivity to engines, brakes and other onboard systems could “revolutionize how the flow of freight is managed as it moves through North American supply chains, creating more capacity for shippers, more pay for drivers and more profit for carriers.”

That could more than compensate shippers for any short-term disruption the mandate may cause, and make the elusive goal of real-time freight visibility a supply chain reality. “We’re going to have the biggest data explosion we’ve ever had in transportation,” Mark Kessler, general manager for trucking at PeopleNet, said at June’s SMC3 Connections Conference in San Diego.

Those benefits won’t come without pain, however. JOC explians the impact of the ELD mandate on trucking capacity could be more significant than that seen under the 2013 hours-of-service rules and the Compliance, Safety, Accountability — or CSA — program.

“A lot of smaller carriers are going to have a tough time,” said Mark DiBlasi, president and CEO of Roadrunner Transportation Systems. “There are a lot of smaller guys out there who don’t run legal hours. Who knows how many of them are out there?”

Even trucking companies that comply with hours-of-service limits typically report an initial 3 to 5 percent drop in productivity when they switch from paper to electronic logs, he said, as truck drivers and dispatchers learn to efficiently use new technology, said Mike Regan, chief relationship officer at TranzAct Technologies and advocacy chairman for shipper group NASSTRAC.

“I’d be shocked if (the overall impact) is not 7 to 8 percent” reduction in capacity, Regan said.

Eventually, though, improvements in truck and driver utilization driven by the new technology could create new capacity, as much as an 8 to 10 percent gain, he said. In addition, the data generated by ELDs will help regulators better understand the actual cost of new regulations.

On the safety front, it’s expected that ELDs will dramatically reduce – and in some cases, eliminate, HOS-related violations. The goal for regulators is that for the ELD mandate to bring some of those violations — not having a current record of duty status or log, not having the prior week’s log, and particularly falsified logs — down to zero. Scofflaws, meanwhile, will no longer be able to keep two sets of logbooks because duty status records will be kept current within the electronic device and will be much harder for carriers to falsify.

Meanwhile, a parallel rule by the Federal Motor Carrier Safety Administration aimed at protecting drivers from “coercion” as it pertains to abuse concerning hours-of-service will also place carriers, shippers and brokers on the hook for non-compliance.

“I’ve met shippers who are giving their freight to carriers who will haul it in a 13- to 14-hour run,” DiBlasi tells JOC.. “They turn a blind eye to it, but they know it’s going on.” Such shippers will have to change their ways, or face thousands of dollars in potential fines for driver coercion.

Mike Weaver, director of sales at DAT Solutions, sees ELDs as an opportunity to bring the type of fleet management systems long enjoyed by larger carriers to smaller carriers, and, most importantly, to tie the data that will flow from ELDs into load boards used by truckers, shippers and brokers.

“If the two-year hourglass gets flipped over this September, fleets, down to the single owner-operator, will have to decide whether they want to continue to participate in this marketplace,” said Greg Sikes, DAT’s vice president of product management. “Assuming they do, we believe smaller fleets will begin to adopt (ELDs), though some owner-operators will hang on until the very last minute,” Sikes said, referring to a presumed 2017 compliance deadline.

Once ELDs are widely adopted, and data from the devices begins to flow back to dispatchers and transportation management systems, drivers, carriers and their customers of various sizes will experience the benefits such as efficient utilization of the current transportation network, using that data to innovate and find new ways to drive efficiency, and collaborative work and improved processes throughout supply chains.

“I think people will get more creative about how they use ELD data to dispatch better,” said Tom Cuthbertson, vice president of regulatory affairs at Omnitracs. “They’ll have better visibility on the whole of what hours are available to drivers and which drivers are available.”

Read the full JOC article here.


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