Many carriers threatened to quit after ELDs. Did they?

Posted: 10 Dec, 2018 by Pat Pitz


16 Comments

Categories: Trucking Regulations

Tags: CarrierBrokerOwner-OperatorShipper


Four months before the ELD mandate took effect on Dec. 18, 2017, DAT surveyed TruckersEdge users to learn how they planned to deal with the new regulation. Most of the respondents were owner-operators and small carriers, and 30% of them said that they would leave the industry rather than use an ELD. 

That didn't happen. While some may have followed through on that threat, the number of active carriers actually has actually grown at a faster rate since the mandate went into place. So, what changed?

Looking for a cheaper ELD solution? KeepTruckin is the most  affordable way to stay compliant.

Source: U.S. Department of Transportation.

 

More money, more carriers

In late December 2017 and early January 2018, the combination of a strong economy, holiday-related e-commerce freight, rebuilding efforts following hurricanes Harvey and Irma, and uncertainty around ELDs pushed rates to the highest level DAT ever recorded. The average spot market rate for van freight shot up from $1.67/mile in January 2017 to $2.24/mile in January 2018. Why leave the industry when you're making the best money in years?

And with rates so high, many company drivers and owner-operators who were previously leased-on decided to go independent and start their own carrier businesses.

Rates surged to record highs in January 2018, and rose even higher in June. 

 

Fewer miles, more money  

Just because carriers didn't hang up the keys doesn't mean their productivity wasn't impacted by the ELD mandate. What were once one-day trips spilled into a second day, as electronic logs provided less flexibility when recording hours of service, and some carriers struggled to adapt to changes in HOS enforcement.

Carriers bracing for reduced income due to reduced miles discovered something instead: the higher rates in peak seasons made up for the loss of miles. Those who stuck it out were rewarded again in June when van rates hit $2.31/mile, another record high.

Will things slow down in 2019?

Now, one year after the ELD mandate, carriers seem to have adjusted, and demand-capacity measures are returning to more normal levels. In the chart above, you can see where the van load-to-truck ratio hit a peak of 9.9 in both January and June but has since dropped to below 2017 levels.

Load-to-truck ratios represent the number of loads posted for every truck posted on DAT Load Boards, and indicate of the balance between spot market demand and capacity. If prices follow suit, it's likely that the pace of new carriers entering the marketplace will slow. Some of those who originally threatened to quit may decide to leave the industry later than they originally thought.

 

DAT load boards provide the largest and most trusted digital freight marketplace in the trucking industry, with more than 279 million loads and trucks posted annually, plus insights into current spot market and contract rates based on $57 billion in real transactions.

Leave your comments

  • profile

    Captain Real

    • 12/12/2018 7:28:37 AM

    Can you say fly by night. It is what I think of these new carriers. They are taking ridiculously low rates and will soon be out of business. If they don't go out of business they will force the carriers who were originally going to leave to do so. We are talking $3.00+ for diesel and rates the same as when it was $2.00 a gallon. You can't sustain that forever. The brokers are in so much competition there is no money left in the load for the small carriers to make a profit. I have always said trucking was a scam but now more than ever I believe it for sure.

    Reply 3 comments
  • profile

    Rj

    • 12/12/2018 7:35:56 AM

    Eld s r ok but the 10 hr rule needs changing.

    Reply 
  • profile

    DARREN FITE

    • 12/12/2018 9:06:09 AM

    Actually many of us did leave the industry, but things not accounted for in this story are the number of drivers who purchased older tractors, or gliders with pre 1999 engines....

    Reply 
  • profile

    Jim Getten

    • 12/12/2018 9:08:56 AM

    As a small (1 truck O/O) I chose to go strictly AG. The exemptions allowed agriculture are many and allow for legal ELD use without the restrictions they put on common sense driving choices. HOS will need to be drastically changed to increase productivity and reduce driver turnover. Bigger paychecks will help but won't fix the bigger problem that poorly thought out regulations bring.

    Reply 
  • profile

    Floyd

    • 12/12/2018 2:04:13 PM

    That is about accurate. I had more work than I could handle in the beginning of this year, and was thinking about adding a second truck. When I finally received a decent loan offer in Aug. Quickly refused plan B as rates were dropping and Plan A is back on the table. I run an AOBRD and still refuse the ELD. I will be shutting down my Authority before Dec 19 if the ELD mandate stays. But maybe this is just Gods way of saying, 23 years is to long for this job.

    Reply 1 comment
  • profile

    PM

    • 12/13/2018 12:04:28 PM

    January through June were record profit months, but most carriers in the spot market are running at a loss right now. Rates have decreased significantly due to excess capacity and the toxic combination of ELDs + weather delays will be catastrophic in the coming months. I predict that produce season will be strong, but until capacity decreases or demand increases, ELD carriers in the spot market will be burning through the profit they made in late 17/early 18. Carriers: be smart, and if you are running this cheap $2/mile freight, you are the problem.

    Reply 
  • profile

    Raoul

    • 12/20/2018 5:40:26 AM

    People did leave. My company paid of 11 drivers and I scaled down to 1 truck. I personally know 5 companies that did the same and left business all together. The only people that have benefited are: 1. Brokers 2. Big carriers. 3. DOT. Small OOs are on their way out. There are more unsafe trucks on the road. Eld is not the problem. The real problem is the HOS and shippers that are not flexible. This is the era of big scale trucking. Drop and hook. Everything is in favour of the big companies. Small guys will be out soon.

    Reply 1 comment
  • profile

    KLW

    • 12/20/2018 7:50:59 AM

    After the hurricane truckers were asking $6.00 a mile - that damaged the broker business a lot so I turned to rail. It's cheaper, but takes longer. Plus, truckers should know that as a broker I am not making much off the loads we broker. Our customers are nickle and dime-ing because they want old rates back and don't appreciate the higher rates. Then there is the fact that DAT rates shown are consistently lower than what drivers want. I believe the numbers they are discussing are significantly lower than reality.

    Reply 1 comment
  • profile

    John

    • 12/20/2018 8:07:01 AM

    I suspect the number of carriers have grown due to the California Nut house laws concerning owner operators. I don't know about trucking companies quitting but I do not drives quit for ELD's.

    Reply 
  • profile

    Beth Jackson

    • 12/24/2018 11:06:44 AM

    I was an O/O that shut down do to the ELD mandate among other things. I drove a box truck that I converted part of it into a sleeper and was doing a lot of OTR, LTL freight. I found a niche where I could get into areas that tractor trailers could not, and haul heavier/bigger loads than Sprinters. The gadget that goes into the diagnostic port were not standardized for 16 pin and there were shortages because it had to be specific to year, make, and model; plus the port is right over the accelerator pedal. So, I went to local haul. When I came back to OTR, I could not successfully operate under the old guidelines where I put my time down as it happened. Under the new HOS rules, time on the load boards was put under dispatch and any time my truck was empty, I was under RV. Plus insurance rates had doubled. Next was Windows 10 and the updates that lock you out until it is complete, cost me thousands of dollars. The final straw is another government over-reach where everything is being switched over to LED lighting, which is short wave Ultra-Violet (there is a reason why our atmosphere filters this stuff out). LED is found in most lights on vehicles, computer screens, T.V.s, cell phones and traffic lights. For me it affects my Pineal Gland and releases DMT (dream chemical) when awake. I was doing a lot of Expedited freight--night driving--and with in a few hours I could have a mild euphoria to full blown acid trip.

    Reply 
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