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:
- Ample Parking—It may sound basic but having enough parking for trailers at your loading docks and warehouses means drivers don’t have to waste time finding a place to park if they are waiting to unload or pick up. The quicker drivers can get back on the road the better.
- First-Come, First-Serve—Drivers prefer flexibility when dropping off shipments; they also like smooth-running shipping and receiving operations. Avoid by “appointment only” warehouse and loading dock policies. Given a choice of appointment-only destinations and first-come, first serve (FCFS), carriers prefer the latter. With tighter restrictions on hours of service, drivers need the flexibility to plan their routes to lawfully comply with the ELD mandate. FCFS loading and unloading policies give drivers more flexibility when planning their days.
- Avoid Detention Fees—Avoid making your carriers wait too long. As a general rule, when carriers wait over two hours you will accrue detention fees and could potentially be flagged as a shipper to avoid due to inefficient dock operations. Make every effort to streamline your operations to minimize wait times for drivers.
- Allow Drop Trailers—If drivers have the flexibility to drop off trailers vs. waiting to load or unload, you increase productivity for carriers, which in turn helps keep your freight costs down. Drivers can also be exposed to wasteful waiting time due to shippers spending time locating an available dock. Structuring smooth facility operations is important to once again minimize wait time for drivers.
- Provide a 48-Hour Lead-Time—When you give your logistics suppliers a 48-hour lead time they will have more time to find the best carrier for your shipment at a competitive rate. Less than 48-hour lead time pushes most providers to source for available capacity within the current spot market rather than dedicated markets. Spot markets typically will yield higher freight costs from carriers due to the volatile level of demand in that particular timeframe. It is important to provide as much lead time as possible to your provider in an effort to reduce freight costs.
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.