Demand and ELDs
Transport Topics, January 1, 2018 reports “Capacity demand has been building since the spring of 2016 due to solid economic growth, said Mark Montague, an industry pricing analyst with DAT Solutions, operator of a truckload freight marketplace.”
This increase in demand is illustrated very nice by DAT solutions below:
This increase in demand coincided with the Electronic Logging Device Mandate in December 2017. This mandate required almost all truckers to use electronic devices meeting certain standards to prepare the driver’s log. This electronic equipment has no flexibility and three is no gray area when it comes to hours of service. Where a driver used to be able to manage his sleeping/driving/working but not driving time in a way that worked for him, this is no longer the case. All drivers must adhere to the strict HOS rules as defined by FMCSA (here: https://www.fmcsa.dot.gov/regulations/hours-service/summary-hours-service-regulations). These rules are intended to make our highways safer – and they probably do.
The cost of the safety initiative is in lower productivity. When trucks are sitting, they are not earning. High fixed costs are now being spread over fewer miles. In the last year, average van truckload rate per mile has increased from $1.67 to $2.11.
For the time being, it looks like van rates will rise until demand subsides or there are more entrants into the truckload market. Shippers should be expected higher rates and more difficult sourcing for the time being.
If you have any questions or would like to discuss your truckload sourcing we would be happy to help!