ELD Mandate: What you need to know

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If you’re in the trucking industry, then you’ve already heard: the US 7th Circuit Court of Appeals has ruled to uphold the ELD mandate. This is not only likely to change the landscape of trucking logistics in the US. Its effects are also likely to carry over to the ocean freight industry as trucking companies look to adapt, or sink.

As with the proposal to forcibly limit truck speeds, this mandate looks to improve road safety for truckers. In this post, we break down the ELD mandate, what it encompasses and how it affects the shipping industry.

What is the ELD mandate?

The ELD mandate requires all truck drivers to install an electronic logging device (ELD). It automatically records driving time, engine hours, vehicle movement, miles driven and location information. This will replace the manual logging of their journeys manually on paper, which has been in place since the 1930s. It allows trucking companies to track driving information as well as non-driving activities of their drivers.

Who does it affect?

This is an industry-wide change, all truckload carriers must make the switch. Basically, if you’re required to maintain a record of duty status log, you will need to make the full change before December 2017. That means a selecting an appropriate ELD according to your budget and performing a full installation for your entire fleet. Paper logs will no longer be legal then.

Affected vehicle type: All interstate commercial motor vehicles models 2000 or newer

Implementation date: December 18, 2017

How will the ELD mandate affect the ocean freight industry?

The installation of ELDs will likely lead to a reduction in the number of miles a truck can travel per day. Certain truckload carriers that have made the switch have reported a 3% to 5% reduction in capacity. Given that, expect a further tightening of trucking capacity leading to delays and delay charges. Higher overall logistics and fleet costs due to the lower truck and driver utilization rates are also a possibility.

When new hours of service rules came into effect in July 2013, shippers witnessed a drop in motor carrier productivity. That had translated into a compromise of capacity. The ELD could very well have a similar impact.

“The downside is the delays and challenges that that can sometimes cause in the logistics side of things as drivers will have to try to schedule their driving time very carefully.”

– Klaus Lysdal, Vice President Sales/Operations Office Manager, iContainers

But not all is grim. Motor carriers who have made the switch say overall productivity has increased, despite the initial dip from the installation and training of personnel.

Arguments

For the ELD mandate

The camp supporting the mandate is led by the Federal Motor Carrier Safety Administration (FMCSA). It says that ELDs will driver compliance, decrease paperwork, reduce the number of fatigue-related accidents involving large trucks. FMSCA estimates that ELDs will prevent some 26 fatalities and 562 injuries from accidents involving large commercial motor vehicles annually.

“The ELD will increase safety as drivers will have to stick to the rules and stop for the rests that they need to take. And it will even the playing field for the truckers in the sense that everyone will have to use similar types of systems and it will be much harder for a driver/carrier to falsify papers. Think we can all agree on that being to everyone’s benefit.” – Klaus Lysdal, iContainers

Against the ELD mandate

The Owner-Operator Independent Drivers Association, which has 157,000 members nationwide, filed an appeal against the mandate. Their main reasons are:

  1. The ELDs aren’t capable of recording enough information automatically due to the need for human involvement
  2. The rule fails to project drivers from harassment as the term “driver harassment” is not sufficiently defined
  3. The rule’s benefits will not outweigh its costs because FMCSA performed a flawed analysis
  4. The mandate does not protect the confidentiality of personal data collected by ELDs
  5. It violates the Fourth Amendment’s prohibition against unreasonable searches and seizures.

However, the appellate court found reasons to disagree with all five points and discard the appeal.

“Whether or not the rule itself imposes a search or a seizure, inspection of data recorded on an ELD would fall within the “pervasively regulated industry” exception to the warrant requirement. The agency’s administration inspection scheme for such information is reasonable.” – Appellate Court statement

Implementing the ELD mandate

Getting 3 million drivers and trucks to install ELDs before December 2017 is a major challenge. Truckers now have just over 13 months to comply with the mandate.

“Even though December 2017 seems like a long time away, it’s just around the corner when you consider that most trucking companies don’t use ELDs. Shippers are advised to survey their core carriers as to whether they currently employ ELDs, or have a transition plan.” – Brian Fielkow, CEO of Jetco Delivery

Plus, it’s projected to cost at least US$1 billion for trucking operators. Training the drivers to use these devices must also be considered. This could take months to achieve, including the initial decline in productivity in the process.

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A year from the ELD mandate

Earlier this year, Truckstop.com conducted a survey of over 1,000 small trucking companies. It found that 84% of respondents did not have any ELDs nor onboard computers. Many had expected the OOIDA to block the rule. Even so, most have no plans to buy and install them until the December 2017 deadline nears. This may translate into logistics problems for shipping carriers, freight forwarders, and shippers. Waiting till the deadline nears means a drop in productivity for these smaller companies. That’s compared to the larger companies who would have already made the switch.

“A lot of people wait until the last minute. A lot of people will get close to that December deadline before choosing a vendor.” – Thayne Boren, General Manager of Truckstop.com

What’s next?

Shippers need to consider their next move, taking into account how this mandate affect their trucking partners. Already, many are asking their trucking companies when they plan on installing the devices if they haven’t already done so. The loss of truck capacity is a potential problem. It’s not uncommon for truck drivers or carriers to simply drop out when new stringent driver work rules come into effect.

The OOIDA can still bring its case to the Supreme Court in hopes of a successful appeal request. But for now, the ELD mandate looks certain to stay.

December 2017 isn’t that far away. Shippers should already start making changes to expedite shipping or face difficulties in capacity and prices in a year.

“Delays during loading/unloading or equipment pickup and return can cause large disruptions in their day. Depending on how strictly driving time rules are enforced. And the reduction in available capacity will lead to rising cost and rising prices. Which of course is beneficial for the industry but less so for their customers and the end users.” – Klaus Lysdal, iContainers

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