Understanding Electronic Logging Devices and Their Impact on Carriers and Shippers

The December 18th compliance date draws near for carriers to implement electronic logging devices on their fleet, affecting an estimated 500,000 carriers and over 3.5 million drivers.  Electronic logging devices, ELDs for short, would replace paper logs, recording individual driver information such as duty status, location of their vehicle when their duty status changes, how far they traveled, motor carrier and vehicle information, hours-of-service data, and shipper and commodity information.1Drivers will also be alerted at least 30 minutes ahead of time of when they are closing in on “their driving limit, approaching their on-duty time limit for a 24-hour period, or are nearing their weekly on-duty or driving time limitations.”1

The Owner-Operator Independent Drivers Association (OOIDA) has been fighting to dispose of the mandate, holding a stance that ELDs violate the Fourth Amendment, which protects individuals from illegal search and seizure.2 The group goes on to state that “the ELD rule does far more than authorize administrative inspections of business premises.  HOS regulations are directed toward the personal conduct of drivers” and invade a driver’s privacy far more than paper logbooks do.2

Another concern is the cost of implementation, which the Federal Motor Carrier Safety Administration expects to cost the industry $1.8 billion with an average cost of $584 per truck. 3,4  This is especially detrimental among owner-operators and smaller trucking companies and is believed to be a factor that will drive many carriers out of business. 

The FMCSA, however, is trying to lessen the blow from implementation costs by allowing the use of smartphones, tablets, and certain wireless devices to be used “as ELDs as long as they comply with all the technical specifications of the regulation mentioned on the FMCSA website.”5

Groups are also arguing that there is no direct correlation between ELDs and safety improvements and that instead, this technology can lead drivers who are running low on time to speed or conduct other unsafe acts in order to catch up or make their next appointment before they run out of hours.

Perhaps the biggest concern on carriers’ and shippers’ minds is the affect such would have on capacity and the driver shortage.  According to TransRisk’s Craig Fuller, the implementation can cause carriers to lose between 2-8% capacity, especially among smaller carriers as they comply with hours-of-service regulations.6  With the industry already short nearly 50,000 drivers and expected to reach a driver shortage of 175,000 by 2024, according to the American Trucking Associations, FTR Intel notes that the ELD mandate could further increase that number, shortening the industry 1 million drivers.3In fact, some carriers have already reported a 10-15% productivity drop since switching to ELDs.7

Shippers are sure to feel an impact as well as the capacity crunch is expected to increase rates in 2018 up to 20%.7With the enforced time limit of 11 hours per day that a driver is allowed on the road, shippers can also expect to see higher prices for mileage-based shipments (as opposed to location-based rates), along with longer transit times with traffic and detention further increasing these delays.  Detention chargebacks, as a result, will also increase as shippers and receivers will need to have more flexible schedules as well as stock their inventory in case of delays.7

Despite all of the negative impacts that ELDs are expected to have, there are benefits as well such as preventing fatigue, replacing paper logs to track hours-of-service thus saving over $1 million in revenue, and increasing efficiency during inspections.

By going electronic, it will also be harder for drivers to falsify log books, which Stephens Inc’s Brad Delco believes will “level the competitive playing field, giving no carrier a distinct advantage over another.”  As he states, “We believe this will result in a more rational pricing environment where best-in-breed carriers with a low-cost operation can compete by having greater flexibility to raise driver pay per mile, which historically could have been trumped by a driver running more (albeit illegal) miles.”8

From a safety standpoint, the FMCSA expects the new ruling to save nearly 26 lives and prevent over 500 injuries a year by preventing truckers from driving while tired.9

The Shippers Playbook:  What can you do?

Here is a list of ways you can help yourself and carriers when e-logs go into effect:

  • Limit early or overnight appointments/create more flexible schedules.
  • Coordinate regular moves/schedule ahead of time so that carriers can plan accordingly.
  • Combine shipments and/or utilize the same carrier for inbound and outbound shipments to help maximize hours-of-service.
  • Reduce detention time at docks by having freight prepared and staged for pick up.  Increase staff on the docks during peak seasons.
  • Consider asset-based carriers with regional terminals who can relay freight to a driver with fresh hours
  • Be prepared and budget for possible rate increases as capacity will shrink.
  • Speak to your carriers regarding possible drop and hook opportunities.
  • Talk to carriers about purchasing  current and future "capacity" as opposed to one off shipments and spot quoting.  It capacity shrinks it may need be there the instant you need it.
  • Be patient.  Many trucks with the deadline looming still do not have the requirement ELDs installed.  There will be a massive learning curve.