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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.

Comments

Elvin Santana

That's funny. You mentioned "higher rates" but I don't see it in the CH Robinson loadboard.

12.12.18

Reply

John

"What seems likely in this economic environment is that we will continue to see higher rates and tight capacity in the near term."

Except that when ELDs etc went into effect, I watch CH Robinson drop their rates and still continue, not to mention 95%( I use that term/% loosely)companies(CH included) dont pay a fair rate for detention. $20-$30 an hour is hardly worth it not to mention 1/2 the time is spent waiting to reach someone and getting them to agree. The industry continues to slide further into more Govt rules/regs made up by people who have never seen the inside of a truck.

12.12.18

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John P nokk

I as a single truck have change to try and work with the eld but find i am losing money. The rate in crease is still not in line with the cost of trucking but brokers and shipper think they are paying more because of the elds.the cost to run a truck .toll taxes driver wages and maintenance of the epa mandated trucks are all up.the same money take 6 days to earn 5 days of pay too.mine time at home has suffered

12.12.18

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Eduardo Rio's / Rios Transportation

If the industry pays more, it is, Different, one is deveral days away from home, when you work and you have to be away from your family and you are accepting sacrifice you want the compensation to be good, I have three trucks only one is working i donot get drivers becouse local jobs are paying the same at what is earned in the OTR. In addition the new rule. ElD. The industry OTR need pay more for Mark the difference. And the drivers they will be motivated to working OTR. Att. Eduardo

12.12.18

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Julie R.

""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.""

I am sorry but as a small-fleet owner, that is not the case at all! Maybe to the big companies and brokers, but to us, No. Also, Detention has not improved at all!! Brokers, shippers, receivers pay what they want if they want. The carriers are always getting the shorted what is or should be ours.

12.12.18

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Gary Barr

It may seem good to carriers like CH Robinson, but the deliveries aren’t made in a timely manner and ask the driver for a small fleet or an owner operator if they are making good money
Like before? It is big brother controlling little brother for their own benefit.

12.12.18

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Harry McKinley

What a Bull Sh@$& article. The real facts is that drivers are chancing it more as this ELD Mandate would otherwise put them out of business. Please report the facts

12.12.18

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Ronald Toews

You have not raised your rates in 6 years

12.12.18

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Thomas

I love the theories published by people that do not own trucking companies, and base their opinions on dry statistics. Where is all the increased demand? Increase prices? Please try to increase prices and you will get stuck with no load. Fyi: prices dropped almost 30% in Chicago land comparing to last year.

12.12.18

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Steve

The ELD is not for every fleet. We've lost our freedom of choice. Also can not find drivers, can't get anything done with the ELD. Had my 2 newest trucks parked for a year. We also do not understand it. It's really sad when you've worked so hard all your life and now the government tells you you can't work that hard anymore!! I served with the 82nd Airborne '70 t0 '72 and never was I told to slow down. HOW MANY OF THE LEGISLATORS HAVE A CDL OR EVEN KNOW ANYTHING ABOUT TRUCKING!!!

12.12.18

Reply

Vince

This is all a bunch of BS CH Robinson has not raised their rates my runs that used to take one day now takes two my broker said that if I didn’t do the run he could find someone else ELD‘s have not help they have done nothing but cause a burden CH Robinson needs to look at there own rates before they try to make it sound like all is find

12.12.18

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