The Government will cost you 20% more in shipping

A quick overview why the Government is costing you more to ship.

The Government will cost you 20% more in flatbed shipping
The Government will cost you 20% more in flatbed shipping

Don’t low ball your customer to ship or you will be taking it out of your pocket.

Effective December 18th 2018

The Federal Motor Carrier Safety Administration (FMCSA) (Government) established standards for Electronic Logging Devices (ELD). An ELD is electronic hardware that connects to a truck’s engine to automatically log hours of service (HOS). Regulating a driver’s hours of driving service is to help prevent accidents caused by driver fatigue. Drivers have until December 18th, 2017 to implement use of ELDs or park it.

The Government will cost you 20% more in shipping

Here are reasons how the ELD mandate impacts Flatbed Shipping freight costs

 The Cost of implementing ELD. When electronic logging devices were introduced 20 years ago, a ELD cost up to $2,500. Today, the FMCSA (Government) estimates that the average annual cost of an ELD will be $495 per truck. The cost to implement ELDs will be passed along to shippers and drive freight costs up. Why?

  •  Decreased productivity. Drivers that have implemented ELDs have reported productivity decreases of approximately 20% with fewer miles driven per day. ELDs track drive-time to the minute and operating logs can’t be “altered.”   So, A driver can no longer report 400 miles driven when they drove 700 miles. So, carriers are charging more to make up for this loss in productivity and revenue. For smaller carriers, expect nominal price increases of 10 to 20% for loads that are booked on the spot market.
  •  Reduced capacity. Some Flatbed Companies will view the cost to implement ELDs combined with the decrease in productivity as (Government big brother) getting in their business and will leave the industry, reducing the number of drivers in the US.

What effect will the electronic log mandate have on freight rates? According to transportation economist truckload rates will increase about 20% next year, with additional capacity pressure caused by the ELD mandate. “The maximum impact will occur in 2018 and it won’t stop until two to three years afterwards when people finally figure out they have to do it.” and customers will have to pay much more.

Truck capacity utilization is expected to remain high and greater than 100% well into 2018 into 2019 and puts the chance of a “significant” capacity shortage at 60%, And noting that the spot market tends to be much more volatile, “easily” to a 15-20% increase in spot pricing.

So, what will electronic logging device regulations mean to shippers?

  • It will result in fewer available carriers. Consider working with a broker/3PL to offer additional resources to keep your freight moving without any delays.
  •  The loss of carrier’s productivity means that shippers will need to better manage their time and lanes that range from 450-700 miles will be affected as these lanes will turn into two-day transit hauls instead of one day costing you more money.

Who Must Comply with the Hours-of-Service Regulations?

You must follow the hours-of-service regulations if you drive a commercial motor vehicle or truck. What is a commercial motor vehicle?

In general, it is a truck, with a trailer, that is involved in interstate commerce and provides Flatbed Heavy Hauling weighs (including any load) 10,001 pounds or more, or a gross vehicle weight rating or gross combination weight rating of 10,001 pounds or more.

There are exceptions to certain hours-of-service requirements for some operations. But be aware that we are talking about the hours-of-service regulations.

The definition of commercial motor vehicle will vary, for example drug and alcohol regulations and commercial driver’s license (CDL) requirements.

Interstate/Intrastate Commerce understand the definition of a commercial motor vehicle, let’s talk about different meanings of interstate commerce and intrastate commerce. Commerce consists with buying and selling supplies and services. It also deals with moving those goods from one location place to another place or driving somewhere to perform the service. Any work done supporting of a business is commerce.

Interstate commerce is when the shipper intends to have cargo transported to another State. The cargo is in interstate commerce from the moment it leaves the shipper until it arrives at its destination. If your truck hauls cargo, even though one State then that transportation is considered interstate commerce.

Interstate Truck Driver’s Guide to Hours of Service

If you decide to operate in interstate commerce occasionally, you are not required to comply with the Federal hours-of-service regulations all the time. You must follow the Federal hours-of-service regulations while you are operating in interstate commerce. At the point you start driving in interstate commerce you must have logs with you for your last 7 days

You must also follow the Federal hours-of-service regulations for a short period of time after you finish operating in interstate commerce. If you were using the 60-hour/7-day schedule, you must follow the Federal hours-of-service regulations for the next 7 days after you finish operating in interstate commerce. If you were using the 70-hour/8-day schedule, you must follow the Federal hours-of-service regulations for the next 8 days after you finish operating in interstate commerce. Intrastate commerce means transportation not covered by the definition of interstate commerce. Usually that means the cargo stays, or the services occur, within a single State.

If you are operating in intrastate commerce only, the Federal hours-of-service regulations do not apply to you. However, most States have regulations that are similar or identical to the Federal regulations. To determine what State safety requirements are, you should contact the State agency or the state’s department of transportation.

Trucks that may be empty. In these cases your truck is still considered to be in commerce because it is being used to support a business. Even if it is empty, you are operating in interstate commerce if you go outside of your State or remain within your State but recently carried cargo that was being transported in interstate commerce. If the truck is empty and you are operating inside your State, you are operating in intrastate commerce, provided you did not recently carry cargo that was being transported in interstate commerce.

Personal Use of a Commercial Motor Vehicle

It is possible that you may not use a truck in commerce at all. You could be moving your personal belongings to a new house or, as a hobby, you may be taking car to a race.

As long as the activity is not in support of a business, the Federal hours-of-service regulations do not apply to you.

If you are not operating your truck in commerce, you are not required to conform the hours-of-service