6 Reasons Why the HOS Rollback Won’t Restore Lost Capacity

Hours of Service iconThe trucking industry celebrated a victory in December when Congress and the president approved a $1 trillion spending bill that included a rollback of the most controversial Hours of Service (HOS) rules.

Specifically, these two provisions have been suspended: The requirement that drivers be off duty from 1 a.m. to 5 a.m. on two consecutive nights before restarting their weekly work clock, and the mandate that 168 hours (7 days) pass before a driver can use the 34-hour restart.

When new HOS regulations went into effect July 1, 2013, they were estimated to reduce productivity by 3 to 5 percent. But brokers shouldn’t assume that capacity will magically return to pre-July-2013 levels as a result of the HOS rollback. Here’s why:

1. Not all parts of HOS were rolled back – Drivers must still comply with the 2013 HOS rule that requires them to take at least a 30-minute break every 8 hours while on duty. That can be problematic in some situations. For example, if a truck driver is delayed at a loading dock for 4 hours, he can only drive for 4 hours before taking the required break.

2. The suspension is only temporary – Keep in mind that the HOS rollback lasts only until September 30, when the federal government ends its fiscal year. In the meantime, the FMCSA must study the effects of the restart provisions and report back to Congress. If there’s evidence that the restart provisions make highways safer, Congress could reinstate them. This creates inefficiencies as fleets have to reprogram their electronic logging devices to adjust for the rollback—and possibly a rollback of the rollback later this year. It also takes time to retrain drivers on the ever-changing rules.

3. Demand is higher – Demand is higher now than it was when the new HOS rules took effect. According to the American Trucking Associations’ Truck Tonnage Index, seasonally-adjusted for-hire truck tonnage increased 3.3 percent last year. November’s index—the most recent reported—was the highest on record. And Gross Domestic Product increased at an annual rate of 5.0 percent in the third quarter of 2014, according to the most recent data from the U.S. Department of Commerce. Load posts on DAT Load Boards increased 49 percent in 2014, compared to the previous year.

Demand for trucks is higher now than it was before new HOS rules were put in place in mid 2013.

4. Fleets have not returned to pre-recession levels - According to the Journal of Commerce Truckload Capacity Index, capacity expanded in 2014 among the largest fleets, but fleets still lag 17% to 18% below pre-recession levels. The ongoing driver shortage prevents many fleets from adding trucks, even when business is booming.

5. Rail intermodal is constrained – Finding capacity in trucking’s primary competitor, rail, is becoming more difficult. Rail intermodal volume was up 5.2 percent in 2014, but rail performance measures slipped in the last half of the year. Railroads can’t expand capacity to meet the demand without significant capital expenditures and months of preparation. Furthermore, diesel locomotive manufacturer EMD doesn’t have an EPA compliant diesel engine, leaving only GE to provide new horsepower for power-starved railroads.

6. More regulations are in the pipeline – Even if the restart provisions are never reinstated, there are a number of other governmental regulations in the pipeline that could take a big bite out of capacity. FMCSA recently issued a notice proposing to increase the amount of insurance required by carriers. A significant increase could put many small carriers out of business, further reducing capacity. And the upcoming requirement that all carriers must use electronic logging devices could reduce miles driven as carriers are forced to use technology that has less wiggle room than paper logs.





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