October 18, 2016

Alex Buening | National Account Director

At this point it’s probably not news to anyone in the transportation industry that there will be a significant change in the industry come December 2017. Just in case it is, let me bring you up to speed…

As of December 18th 2017, with very few exceptions, all commercial vehicles must be equipped with an onboard electronic logging device (ELD). Thus, paper logs will not be a sufficient and legal form of recording a driver’s duty status. Because the ELD units are required to be directly linked to the equipment’s motor, very precise and accurate data collection will be maintained and subject to regulatory fines if HOS regulations are infringed upon.

So, you may ask: “How on earth does this affect my facilities detention exposure?”

Within a driver’s 14 hour allowed span of active duty status he or she is only allowed to physically drive the vehicle for 11 hours of that span. This allows a 3 hour window for loading, unloading, fuel stops, weigh scales, mandatory 30 minute break, etc. This will greatly impact shippers that operate lanes within the 400-600 mile range. The main objective for a carrier is to maximize the amount of revenue to the truck each day, so when the ELD mandate takes effect the 4 hour, 5 hour, 6 hour and beyond of loading and unloading times will become detrimental to the amount of loads they can utilize on the truck in a given week. A majority of OTR freight in the U.S is regional 1 day drives- so you can see how long wait times can compound throughout the week and become a costly inconvenience to their operations.

With these tight regulations, I expect that carriers will become selective on the shippers they work with and expect a greater amount of detention compensation than the current standard throughout the industry. A shipper’s exposure to detention, in my opinion, will significantly increase. The days of shrugging off the charges will, for the most part, become a thing of the past. It will be crucial for carriers to collect these assessorial charges to justify the significant costs that go into running their fleet of trucks.

Minimizing avoidable operational costs is of extreme importance to any company and detention very well may be a top concern heading into this regulatory change at the tail end of 2017. To put it in perspective let’s say ABC Co. does 20 outbound shipments per day and averages a 4 hour loading time and their standard detention policy is $60/hour.

With these tighter regulations carriers will need compensation for their time.. so let’s look at the math for a 5 days per week Monday – Friday shipper:

260 operating days X 20 loads/day= 5,200 loads X 2HRS detention per load @ $60= $624,000

Yes.. that’s $624,000 of detention exposure. That will get your boss’s attention!

In summary, do I think this is the transportation apocalypse? No, not at all. Do I think that there be some changes in the market due to these changes? Yes. The good news is we have just over a year to prepare and take proactive measures to be better prepared for these changes. Both carriers and shippers/receivers will have to make adjustments to their operations, that’s a given. At the end of the day just about everything we use in our day to day lives is transported on a truck at some point, so the need for transporting goods will stay the same. I do believe that regardless if a shipper/receiver or a carrier, those who are proactive and adjust their operations ahead of the upcoming mandate will have a significant upper hand come December 2017. I do know one thing for certain, Spot will be ready.