Have ELDs rocketed the blazing truckload market into low-earth orbit? Maybe not all by themselves, but they’ve had an undeniable impact on freight transportation.
First, let’s be clear. Many analysts claim any effect is due to drivers no longer able to “cheat” on paper logs. Sure, that’s true in some cases, but more often it’s the unforgiving nature of ELDs and hours of service that cause drivers to leave the road early in search of parking. And safe drivers, unwilling to risk their lives for a load, pull over when they’re tired – time that cannot be made up under current rules.
With that understood, back to the impact of ELDs.
The economy has been on the upswing for nine years and had already reached near record levels when along came a major tax cut that kicked in at the start of 2018. People were spending, builders were building, retailers were selling, and there weren’t enough trucks to move everything that needs moving. At least there weren’t enough drivers willing to drive them.
Of course, 2018 is also the year ELDs arrived. ELDs cut down on hours you could drive as noted above. So the same number of drivers covered fewer miles. In the already overheated freight market that caused what Business Insider, a news outlet, called a labor shortage.” Their July 29 story noted one Los Angeles-to-Canada produce hauler who figured the ELD requirement would cost him about $1,800 a month. He quit, along with some 50 other drivers, in protest, Business Insider said.
ELDs have had a big effect on the truckload sector, and the impact widens as the economic boom goes on.
Brokers and shippers are hurting from an increase in transit times. Journal of Commerce reports trips of 700 to 1,000 miles that once took two days now take three. Trips of 450 to 550 miles that moved overnight now take two days. That was probably no surprise to you, but it came as a big surprise to many businesses that had to scale back on promises to their customers. Those short runs are now called “tweeners” by many brokers.
One result: higher consumer prices. A number of major food companies, including General Mills, Hormel Foods, and Tyson Foods, will be raising prices this year to pay for their higher transportation bills, according to Business Insider. Among the brand names of these three companies alone are Pillsbury, Betty Crocker, Wheaties, Green Giant, Sara Lee, Hillshire Farms, and even Spam – the real thing, not the digital stuff. And those are just a fraction of many.
ELDs’ effects in the U.S. reach into Canada. Since so much Canadian business involved cross-border moves, increased U.S. transit times have screwed things up north of the border. “Capacity was pretty tight and the ELDs just exacerbated the problem,” a Canadian shipper told Journal of Commerce.
Truckload’s ELD transit problems are an obvious factor in the growth of intermodal shipments – shippers switching from highway to rail. They have also pushed truckload freight into the LTL market.
“We’re seeing 35-skid pick-up orders spread across three bills of lading that would have been a truckload,” a New England Motor Freight executive told a logistics conference recently.
But ELDs do not seem to have hurt Big Truckload’s bottom line. According to Transport Topics, contract rates in June were up by 19 percent compared to a year earlier. Spot market rates were up by 29 percent, which reflected van rate increases of 52 cents per mile, reefer increases of 58 cents per mile, and flatbed increases of 65 cents per mile. Recent transportation headlines blared huge profits for almost all the publicly owned carriers. J.B.Hunt, for example, reported a profit of $151.7 million, up 50 percent from a year earlier – and that’s just for the three months of the second quarter of 2018.
To the extent they worsened the driver crunch, ELDs helped driver pay to increase. But those increases have not reflected the good fortune of the big fleets. Business Insider reported that so far in 2018 driver compensation has risen 10 percent to 12 percent,with roughly half of all drivers getting raises. In 2017, that number was 11 percent.
Those raises have had no impact on the turnover rate of 95 percent. Too few employed drivers have been persuaded to stay on the job and too few newbies have been enticed to the industry. Business Insider quoted sources saying only a pay increase of 40 percent to 50 percent could to that.
Will ELDs help that happen? I doubt it.