Overdrive Magazine | Trucking Business News & Owner Operator Info
Issue link: http://read.dmtmag.com/i/856429
August 2017 | Overdrive | 33 mandate comes into play at the end of the year, only 20 percent report using e-logs today, many of them leased to larg- er carriers that have required it for years. While that percentage is up from spring 2016 levels when nearly identical poll- ing at OverdriveOnline.com showed 14 percent of respondents using e-logs, it's hardly approaching universal adoption. According to recent polling, six in 10 Overdrive readers, largely an anti-ELD mandate group, believe there will be at least an upward bump, if not a pro- longed change, in rates. Two principle assumptions underpin the notion that ELDs will impact the industry enough to result in capacity shortages that drive up rates. Fewer miles ASSUMPTION NO. 1: Many drivers now are running more miles than they otherwise could if strictly adhering to the hours of service rule. A solo owner-operator running strictly legal hours would be hard-pressed to top 125,000 annual miles, says Todd Amen, president of ATBS, the nation's largest owner-operator financial services provider. Estimating that half of today's trucks don't have an ELD, "when we put in this ELD mandate, we're going to lose 8 to 12 percent of the miles that we run." Rates, he says, "are going to have to go up to compensate." In Overdrive's February report on this series, we reported a 3 to 6 percent pro- ductivity drop, post-ELDs, for larger car- riers. Some owner-operators have noted larger drops. With so many large carriers already operating with e-logs, a reduction in overall capacity on the lower end of the oft-noted 3 to 6 percent productivity drop reported by carriers may be most likely. Craig Fuller of the TransRisk rate-hedging service believes the rate impact of a small drop, likely to be a couple percentage points over the next two years, would be minimal. But if the equivalent of 6 percent of available capacity were taken out of the market, the impact on rates would be "exponentially more" because of how the supply chain works, Fuller says. Shippers likely would overbid rates to ensure their loads move quickly enough. The ELD rule's full impact will be dif- ficult to gauge, he says, since other vari- ables could play a factor for the remain- der of 2017 and into 2018: e-commerce growth, changes in trade policy, govern- ment spending and more. Amen, like the Barton Logistics ana- lysts, admits he's gotten a fair number of his own forecasts relative to ELDs and rates wrong. In spring 2016, Amen pre- dicted that miles for his owner-operator clients would drop in 2016 as the ELD transition picked up steam. On the contrary, miles rose as owner-operators ran harder to make up for lackluster rates through most of the year. Most continued to postpone ELDs as long as possible. Amen also predicted 2016 rates would be up 10 percent or more, which didn't happen. He says he was "just early" on that one, as rate indexes began to swing in a positive direction for truckers in late 2016 and into 2017. Whatever the timing, Amen and some others still believe ELDs will push up rates. Speaking on a conference call with owner-operators in April, he said the ELD transition is "going to mean great things for you, ultimately. … Once that takes the ability to run [excess] miles out of the industry, there will be more freight, and rates will have to go up." Don't count Monte Wiederhold, own- er-operator of nine-truck B.L. Reever Transport, among the true believers. Wiederhold faults the assumption that there's much "skipping a trip," or hid- den drive time, going on among pros today. "I've been through a couple DOT Detention pay as productivity stimulus Following a shift to e-logs, Old Time Express' Mark White doubled the small fleet's detention rate with its direct cus- tomers, who account for about 85 percent of its business, from $50 to $100 an hour after two free hours. That free time, something of an industry standard, he's now cut in half with most of the brokers he uses, insisting on $100 an hour for detention after a single free hour when he can. "On any load – two hours loading, two hours unloading – that's four hours you've lost," he says. "You're going to lose some productivity going paper to electronic, but it's not all on the trucking company. Shippers and receivers are going to have to understand that they play a bigger role in it than anybody." Hear a conversation with White and his brother, Mitch, via a July edition of the Overdrive Radio podcast: OverdriveOnline.com/OverdriveRadio.