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About the Author

Steve Raetz — Director, Research and Market Intelligence

Steve has been with C.H. Robinson since 1989. He currently supports strategies designed to enhance the realized value that logistics operations have on supply chain and business initiatives. Steve is a graduate of Minnesota State University, Mankato and serves on two university supply chain advisory boards.

Analyzing the Impact of the ELD Mandate on Truckload Shipping

ELD Mandate line of trucks in Robinson blueIt’s been nearly a year since the electronic logging device (ELDs) mandate went into effect. Some had predicted that the industry would see mass carrier bankruptcies or a flurry of acquisitions of smaller carriers by larger ones, but that hasn’t been the case. Instead, thanks to the strongest truckload shipping market since deregulation in 1980, the ELD mandate’s effect on the market is playing out in other ways.

The anticipated impact of the ELD mandate

As 2018 got underway, drivers’ hours of service (HOS) didn’t change, but the ELD mandate effectively eliminated any flexibility drivers may have taken with paper logs. With ELDs in effect, lane waste and efficiency could be documented for the first time.

The dire predictions of a year ago were based on traditional truckload shipping market fundamentals, with the usual peaks and lulls. In other words, peak shipping seasons like the holiday rush would be followed by slow shipping periods when there would be an oversupply of trucks. If this had been the market scenario when the ELD mandate went into effect, carriers would have borne the financial consequences of inefficiencies or loss of hours in the market. The result may well have been bankruptcies and acquisitions.

That wasn’t what happened. Instead, there was far more demand for truckload shipping than there were trucks available. Since demand outstripped the supply of trucks, carriers didn’t have to take on the costs of the ELD mandate. They simply passed on the costs, raising their prices to compensate for inefficiencies and loss of hours.

The reality of the ELD mandate

So, what has been the actual impact of the ELD mandate on truckload shipping? It had been expected that with all carriers using ELDs, there would be a way to measure the loss of market hours, but the documentation won’t be accurate until ELDs are in widespread use. As of March and April of 2018, a survey of ELD readiness by MiX Telematics and Bobit Research Services revealed that 29% of fleets that needed to comply with the ELD mandate still had not done so.

In the meantime, a few analysts and others have ventured that the loss of market hours is about 3%. Yet, with demand outstripping truck supply, it’s hard to say for sure what percent of price increases should be attributed to the ELD mandate vs. other freight factors vs. simply “demand is greater than supply.”

It does appear that the ELD mandate could be behind price increases for (formerly) one-day routes of 400-700 miles. Drivers are on the clock for 10 hours per day. But once you’ve accounted for waiting times to load and unload, only 7-8 hours are actually spent driving. Shipments that previously had one-day transit times are now two-day. Carriers have changed rates accordingly to earn the revenue per day they need to be at healthy financial levels.

The same principle applies to dray carriers who work out of the intermodal (rail) terminals. It has always been true of intermodal service that the closer you are to ramps (at both pickup and destination), the better the price will be. That is still true today. But the ELD mandate is causing some of the longer dray destinations to be out of reach with hours of service being managed more critically. The longer dray points may need to be destined to closer ramps that have shorter dray. The trade-off may be in total transit days for the shipment. Intermodal can probably still serve these points, but logistics planners need to consider transit and cost trade-offs.

Final thoughts

As we move into 2019 and more carriers follow the rigors of documentation that come with the ELD mandate, the true impact on the market will become clearer. What seems likely in this economic environment is that we will continue to see higher rates and tight capacity in the near term. Some of the impact of higher rates can be mitigated by working closely with transportation providers, and doing what you can to make your freight more attractive to carriers. Being a favored shipper will continue to pay off. If you need more ideas for working with carriers that fit your unique supply chain, connect with one of our experts.

Autonomous Trucks, ELDs, and More at ATA’s Management Conference and Exhibition

Autonomous Trucks, ELDs, and More at ATA’s Management Conference and Exhibition.TheRoad

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Autonomous trucks. Safety. Today’s and tomorrow’s marketplace. The future of trucking. These, as well as a significant number of others, were key discussion topics at this year’s American Trucking Association’s (ATA) Management Conference and Exhibition. In my role at C.H. Robinson, I study market pressures, disruptors, and evolutionary market cycles to bring valuable insights to our customers. This year, I was able to attend ATA’s conference to listen to the debates, ideas, and insights of today’s trucking industry.
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- Director, Research and Market Intelligence