If you’re a shipper, carrier or logistics company, it’s been impossible to ignore the news about the industry’s ELD mandate (Electronic Logging Device), which went into effect late last year. April 2018 was the first official month where carriers could be fined, ticketed or put out of service for non-compliance. We first covered the emergent ELD mandate in an article that appeared on the GlobalTranz blog last December.
In that first article—”Top 5 Questions Shippers Have About the ELD Mandate”— we addressed the sources of angst many shippers were having with the new regulation.
What’s been the impact of the first 45 days of working under these new, more restrictive guidelines? What’s been the impact on rates and transit times?
Here’s what we found:
Working in the New ELD Mandate Environment
Before the ELD mandate went into effect, industry analysts and insiders were mostly pessimistic in their predictions of how it would impact shipping rates, freight capacity, transit times and more. While a few analysts warned of the end of the trucking world as we know it, most others predicted modest rate increases and longer transits which would affect delivery times, resulting in disruptive supply chains.
Prior to the ELD mandate going live, there was industry-wide speculation that we could see about a seven percent decline in the for-hire carrier sector. However, according to recent survey results from the website Carrierlists.com, compliance is averaging a high 97 percent. It appears the highest compliancy standings have been reported by super-regional carriers (1000+ miles, but not nationwide). Additionally, we’ve witnessed fewer carriers than anticipated leave the marketplace due to ELDs—an effect we attribute to a strong freight economy and high per-mile rates. While carriers may be putting fewer daily miles on their assets due to ELDs, the declines are offset by channeling loads toward shippers who are easy to work with and are advantageous for their operations and business.
Depending on lanes and distance traveled, transit times are increasing amongst most carriers, an early prediction that has mostly come true. With the ELD mandate in place, drivers can no longer alter logbooks, which helped some exceed government-regulated daily driving limits. We are advising our customers that many borderline lanes of 450 miles or longer—previously one-day trips—are now turning into two-day transits. For drivers, shorter work days has resulted in a 3-10 percent reduction of time on the road, according to DC Velocity. That’s also why some drivers are less inclined to take on the longer hauls of 650-750 miles per day. DC Velocity also notes that driver reticence to haul these loads is keeping supply tight, which is resulting in a “significant amount of price inflation.”
At the end of last year, most carriers and 3PLs were predicting an across the board 5-10 percent rate increase. Depending on the lanes and where you are shipping in the country, rate increases could be more. Our advice is to be prepared for potential rate increases and budget accordingly so that your logistics teams aren’t surprised. It’s suggested to become more familiar with spot market costs, as dedicated capacity may start to diminish during the peak shipping seasons. Rate increases and capacity constraints aren’t coming from the ELD mandate alone. Factors such as the driver shortage, high freight demand due to the growing economy combined with the ELD mandate are conspiring to keep rates higher.
Why You Need to Become a “Shipper of Choice”
In today’s capacity environment, carriers have the luxury of choosing to haul loads that are the most lucrative for them, which means you must eliminate the inefficiencies in your supply chain operations. When you do this, you’ll move closer to becoming the kind of customer carriers love to work with: the so-called shippers of choice.
Here are five tips to get started on your path to becoming a shipper of choice:
Stay tuned for next week’s blog where we will discuss becoming a shipper of choice in greater detail.
Learn more about becoming a shipper of choice and driving efficiencies into your supply chain. Call 866.275.1407 or Contact Us.