Brokers Concerned About ELDs Too

As of this week, the ELD mandate is one year away. That means that after December 17, 2017, all heavy-duty trucks (with a few exceptions) must use electronic logging devices (ELDs) to log their hours of service.

While large carriers have been using ELDs for years, many small fleets and owner-operators have yet to make the switch from paper logs to electronic devices.

The affect on capacity

Commercial Carrier Journal reported on a presentation by analyst John Larkin of Stifel Transportation Group, in which he predicts the ELD mandate could push 3 to 5 percent of the industry’s capacity off the road. Other predictions are more pessimistic. During a panel discussion at a transportation conference, Werner President and COO Derek Leathers said he thinks that capacity could drop by as much as 6 to 10 percent.

While mid-December might seem like a good time time of year to begin a new regulation, trucking doesn’t slow down as much as some might think. In the first week of December this year, the van load-to-truck ratio (number of load posts vs. truck posts) hit a 30-month high of 4.7 loads per truck. Even a small reduction in capacity next December could tip the scales toward a capacity crunch.

Fewer carriers, lower margins

Mike Riccio is chief marketing officer for Leonard’s Express, an asset-based 3PL in Farmington, NY. The company’s brokerage arm accounts for about 60% of its business; the other 40% comes from its carrier business, which operates more than 300 trucks.

Grocery freight makes up most of the company’s business, so Leonard’s Express depends on a lot of small carriers and owner-operators.

“On our asset side, when we switched to ELDs, we knew there would be a temporary loss of productivity. But that loss of productivity was larger than we anticipated and lasted longer than we anticipated,” Riccio said. “As a broker, I feel that there is going to be a reduction in the amount of available equipment and it’s going to impact our margins because we’re going to have fewer carriers to choose from.”

In addition, Riccio thinks some late-career owner-operators might decide to retire early, and others may simply give up their business and go to work for one of the large carriers.

Carriers may drag their feet

Brian Sutton is CEO of the Texas-based freight brokerage Austin Freight Systems (AFS), which works with many small and medium-sized carriers.

“Right now, I’d say that fewer than half the trucks we use have ELDs,” Sutton said.

He will monitor that percentage more closely once 2017 arrives. Each month he plans to poll his top carriers and track the percentage that have implemented ELDs. His goal is to have at least 50% by March, and 75% by June or July.

He realizes this could be an optimistic goal.

“I know how people are. They drag their feet,” he says. “I’m concerned that some carriers are going to wait until October, November, and even December to initiate it and they should be initiating it in early 2017.”

We’d like your thoughts. If you’re a broker, what percent of the carriers you use have already adopted ELDs? Are you concerned about a loss of capacity following the ELD mandate?