Trucking Regulation Update: Winds of change?
Carriers say Washington is now listening to the industry, and they believe the winds of regulatory change are finally blowing in favor of trucking. However, balancing industry needs with safety reforms remains an ongoing challenge.
Transportation in the NewsArticle 3: Hedging Applications for Trucking Carriers, Shippers & 3PLs Carrier executives grapple with driver shortage expected to worsen Panjiva reports gain in July shipments despite trade concerns July Cass Freight Index Report shows ongoing declines U.S. rail carload and intermodal units trend down for week ending August 10, says AAR More Transportation News
Transportation ResourceCreate Shipping Efficiencies and Decrease Delivery Costs How will your shipping team win during peak season?
One of the biggest myths in trucking is that it’s a completely deregulated industry. It’s true that, economically, it has been deregulated in interstate commerce since the Motor Carrier Act of 1980, but it remains one of the most tightly regulated sectors in areas of safety, environmental pollution, driver standards and other areas of societal concern.
However, since the installment of Donald Trump as the nation’s 45th president two years ago, the winds of regulatory change have blown in favor of trucking following eight years of what industry leaders claimed was one of the harshest regulatory environments in trucking’s 100-plus year history.
“This administration is looking at the regulatory environment a bit differently,” says Mark Rourke, executive vice president and COO of Schneider, the nation’s secondlargest truckload (TL) carrier. “We’re not seeing a lot of activity with new regulations.”
Others agree. Myron Shevell, chairman of the Shevell Group, parent of Eastern Freightways and New England Motor Freight, says that he’s known Trump for perhaps longer than anybody in the industry. A fellow New Yorker, Shevell calls the president “a good friend” who knows the business of trucking well.
“He has certainly made regulations at least tolerable.” No matter how bothered truckers are by what they perceive as excess regulation, shippers ultimately pick up the tab of any additional costs by their carriers, of course.
So, as we approach what could be the midpoint of the Trump presidency, Logistics Management takes a deeper dive into the currently regulatory landscape that might be good for safety and the environment, but could put the brakes on trucking productivity and continue to pump up your rates.
The big three
The three biggest regulatory hurdles currently facing trucking are the enforcement of electronic logging devices (ELDs), the further tweaking of driver hours of service (HOS), and the move to allow a pilot program of only 200 drivers under the age of 21 into interstate commerce—an age-group that has been locked out of driving the big rigs since the Motor Carrier Act of 1935.
So far this year, the biggest issue for shippers has been the lost productivity due to the full enforcement of the ELD rule. This rule is designed to eliminate cheating on driver HOS through the elimination of paper log books in favor of electronic devices that are difficult to evade.
After months of issuing warnings, state enforcement personnel began issuing stiff fines for HOS violations last spring. The result, executives say, is between 3% and 8% lost productivity due to the elimination of cheating.
“It’s a good thing for the industry,” says Rourke. “It has gotten many of the bad actors to become more efficient with their driving time.”
Longtime advocates of ELDs say that the devices ultimately make carriers and their drivers more efficient through better planning of routes to take cost out of the system. Carriers say ELDs can help nudge shippers to work more closely with their carriers on times and locations of pickups.
Even little things as reducing congestion at the loading dock can pay big dividends for both shippers and carriers in eliminating inefficiencies. Schneider, like many large truckload carriers, began using ELDs over a decade ago.
CFI, now a unit of Montreal-based TFI International, has been using ELDs or similar devices since the mid-1990s. “We were an early adopter,” says Greg Orr, president of CFI. “We’ve always had a very strong record on safety, and this only helps in any safety audit that the DOT conducts.”
Orr says that he’s glad that the entire industry is now on a level playing field with HOS. “We understand the benefits of having something like this,” adds Orr. “Back in the day, it was a free for all. Nowadays, there’s so much traffic and so many restrictions…and this teaches our drivers to better plan their day.
They’re much more organized than they’ve ever been.” Of course, shippers understand that this all comes at a price. In this era of booming freight demand and stagnant capacity, shippers are now under more scrutiny than ever when it comes to ease of freight flows and becoming a “shipper of choice” for carriers.
“We’re in a partnership now with shippers in keeping our best drivers in the industry,” says Orr. Carrier executives tell Logistics Management that shippers should try and emulate four best practices in order to mitigate the effect ELDs are having on their valuable capacity and rates:
- make sure your business is not overly complicated from a carrier’s perspective;
- eliminate unnecessary stops as well as freight that require multiple moves;
- reduce or eliminate dwell and detention times, which ultimately reduces driver pay; and
- create favorable lanes and market niches to make your relationships mutually beneficial.
Ultimately, if those goals are realized, shippers can obtain all of the capacity that they need from a variety of carriers vying for their business. Otherwise, carriers say, their choices will lessen and rates increases will skyrocket.
While compliance with the ELD rule has reached nearly 99% across the trucking industry, truckers continue to complain about HOS regulations, especially the impact they have on agriculture, seasonal deliveries, logging and other sectors of trucking.
Washington is responding to widespread congressional, industry and citizen concerns to determine if HOS revisions may alleviate unnecessary burdens placed on drivers while maintaining safety on the highways.
The four specific areas under consideration for revision are:
- expanding the current 100 air-mile “short-haul” exemption from 12 hours on-duty to 14 hours on-duty in order to be consistent with the rules for longhaul truck drivers;
- extending the current 14-hour, onduty limitation by up to two hours when a truck driver encounters adverse driving conditions;
- revising the current mandatory 30-minute break for truck drivers after eight hours of continuous driving; and
- reinstating the option for splitting up the required 10-hour off-duty rest break for drivers operating trucks that are equipped with a sleeper-berth compartment—the so-called “splitsleeper” rule.
In the meantime, the Owner-Operator Independent Drivers Association (OOIDA) recently asked for regulatory relief from the 14-hour on-duty requirement, and is hoping to catch a break. The good news is that it appears that the Federal Motor Carrier Safety Administration (FMCSA) is actually listening.
During the recent flooding in the wake of Hurricane Florence in the Southeast, FMCSA issued an emergency declaration that gave truckers regulatory relief in 13 states and the District of Columbia to allow more efficient transport of supplies and other equipment and personnel.
It’s regulatory nimbleness like this that carriers applaud, but say has been rare coming out of Washington. However, in a case of unintended consequences, the changes in HOS, along with full enforcement of the ELD regulation have caused the exacerbation of another issue: There are not enough places for truckers to safely park along the highways when they’re out of hours.
“Now that everyone is on the ELD program, parking is more challenging,” CFI’s Orr explains. “Everybody is running a similar schedule, so it’s like a race to get to the next truck stop and get parking.” The parking situation has gotten so bad that many carriers are subsidizing their drivers to park at paid truck stops.
Usually, those nightly parking spots cost between $5 and $20, which can add up if a carrier like CFI has several thousand drivers on the roads every night. “We subsidize them,” says Orr. “If I had the magic bullet to this challenge I’m not sure I’d be running a trucking company.”
Under-21 being considered
Few situations in trucking have generated as emotional a response as the July 3 announcement by the DOT that it would begin a pilot program to allow drivers under the age of 21 to operate an 80,000- pound truck in interstate commerce.
“The statistics are clear,” says Todd Spencer, president of the OOIDA. “There really isn’t any question that younger drivers are more likely to crash and be involved in serious incidents.” And considering a fully loaded tractor trailer can weigh 40 tons, carriers and safety advocates alike agree that this is no place for on-the-job training.
NEMF’s Shevell calls the under-21 proposal “a terrible idea that will worsen highway safety for all.” For sure, it’s a hot-button item within the industry, with most executives staying mum on the subject for fear of alienating the Trump administration—which is pushing hard on the idea.
“It’s a tough one,” says Schneider’s Rourke. “The insurance providers aren’t excited about it based on the risk profile.”
Rourke suggests that younger drivers could break in on the so-called first- and final-mile runs that tend to be local in nature, adding that what’s really needed is a workable apprentice program that allows younger workers to get a taste of the industry before sending them out with an 80,000- pound rig on their own.
“That gets them used to the process of professional freight handling,” he adds. “We think there’s a place for that.”
Minor, but important changes
On top of the three big issues, there are other, relatively minor changes being considered by the FMCSA on the Compliance, Safety, Accountability (CSA) program’s Safety Measurement System used to identify motor carriers at high risk for future crashes.
FMCSA is considering what it calls an “Item Response Theory” data method recommended by a National Academy of Sciences unit to fine tune the way CSA does its data collection to rate drivers and carriers on safety. It’s a two-year study that’s scheduled to be completed next year.
Carrier executives aren’t holding their breath. “Some CSA scores have been beneficial and some have been detrimental,” says CFI’s Orr. “For the most part, they’re trying to do the right thing. But you can’t make everybody happy.”
FMCSA did score points with carriers when it recently ruled that individuals with a stable insulin regimen and properly controlled insulin-treated diabetes mellitus (ITDM) could drive a truck in interstate commerce.
“This final action delivers economic savings to affected drivers and our agency, and streamlines processes by eliminating unnecessary regulatory burdens and redundancy,” said FMCSA administrator Raymond Martinez. “It’s a win-win for all parties involved.”
The rule will eliminate the exemption program that currently requires individuals with ITDM to incur recurring costs to renew and maintain their exemptions. FMCSA estimates this will save the nearly 5,000 individuals with ITDM that currently have exemptions more than $5 million per year.
The final rule will also save new ITDM exemption applicants and their associated motor carriers approximately $215,000 annually in opportunity and compliance costs related with the exemption program’s waiting period.
That alone will not solve the driver shortage; however, carriers say it’s an example of Washington listening to the industry with an open mind, which itself is a change in the regulatory environment.
Subscribe to Logistics Management Magazine!Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!
Ocean: Protecting margins in a soft market Warehouse Voice Technology Speaks for Itself View More From this Issue