Happy New Year! 2017 is officially here and we are ALREADY nearing the end of January! Nonetheless, we are still at the beginning of 2017 and there is much anticipation and preparation for the changes this New Year will bring. 2016 was an interesting year to say the least. We witnessed several significant events, including the unveiling of our new president, Hours of Service updates, and the most anticipated change, the new ELD (Electronic Logging Device) mandate. In short, 2016 introduced several changes that will take place this year. In one of my previous blogs, I talked about the value of change and the important role it plays toward progression. The only caveat with change is it is never received with the same level of enthusiasm, which is to be expected; optimism and pragmatism have a tug of war, but in the end, both points of view are valuable. We do expect to see more changes in the future under the Trump administration, but we remain optimistic that they will all lead to the benefit of our industry, and most certainly our great Country.
As I previously mentioned, one of the more anticipated changes is the ELD mandate and its official implementation date. This new ruling has stirred up a lot of commentary since its introduction a couple of years ago and continues to be the center of conversation; despite the discourse and appeals, it is set to be implemented end of this year (December 16th to be exact). Despite circulating opinions and court appeals, driver safety is the foundation and main prerogative of this new mandate. The device is equipped to comply with the federally mandated Hours of Service for commercial drivers. In October 2016’s blog, I talked about the potential value these new devices could add to our industry with the Hours of Service aside – ELD: Friend or Foe? These logging devices provide visibility on the costing side as well as training side through detailed metrics gathered from the Engine Control Module (ECM). They are also equipped with excellent routing technology specific to commercial vehicles as well as an instant messaging center for drivers and dispatchers to quickly and efficiently communicate. Drivers will also be able to LEGIBLY log their duty status (no more crooked gridlines!) Although we see the potential value in these new devices, there is still a very important question that I believe is on everyone’s mind: “How will this new mandate affect future capacity?”
A large number of carriers have either already implemented or started the implementation process of the ELDs. Several were already utilizing EOBRs (Electronic On-board Recorders), so the transition to the new ELDs should be relatively smooth for these companies. For many others, this is a brand new transition and will require more lead time to install, train, and establish familiarity with the new device.
It is our hope that the ELD ruling will not have a major impact on the available capacity, as the driver shortage is already a major impetus in current capacity. Starting December 16th, Brokers and 3PLs, as well as shippers, must be cognizant of the carriers and owner-operators they book loads with. Asking if these drivers have the new federally mandated ELDs installed will become a routine question asked. If a carrier has not yet installed the devices within the specific time period allotted in the ruling, a 3PL or shipper will not be able to use them. Imagine if this happened with 5 out of the 10 carriers a dispatcher typically uses. This is a 50% drop in capacity! As a result, those five carriers lose profitability and 3PL’s and Shippers suffer a drop in capacity. Obviously, this is only an example, but it provides a visual of what could happen on a much larger scale.
In addition, the insurance industry will certainly have a say in this as well. ELD implementation will certainly impact premium renewals in either cost or coverage itself; premium coverage could rise or be declined all together if insurance providers see too much risk involved. I think this potential impact is something that has been overlooked substantially.
The changes that are already underway for this year are going to impact our Supply Chain as a whole, so it is imperative that we all move forward, in the same direction, ready to use these industry transitions to our advantage and benefit.