Government Regulations: Why Capacity is a Looming ConcernWritten by Neal Willis
We are currently facing a severe driver shortage of roughly 35,000 – 40,000 drivers, government regulations are squeezing capacity, and carriers are facing the pressures of higher operating costs from lower fuel surcharges, driver pay increases, and a deteriorating infrastructure system.
Several industry regulation changes right around the corner include the electronic log book mandate and the speed limiter mandate. These changes will further squeeze capacity and place a burden on shippers who don’t have dedicated capacity and a good carrier / 3PL relationship established.
Many carriers already follow self-imposed speed limits and have installed speed limiters that limit truck speeds to increase fuel efficiency and safety. However, when speed limiters are mandated, all carriers and owners/operators will have to follow the rules and lower their speeds, which means productivity will be somewhat hindered with fewer miles being driven at lower speeds within any given time frame.
Electronic Log Books
For most drivers, the more miles they drive, the more pay they can earn. Some drivers using paper log books have been known to forge their logged hours in order to earn more take home pay and to avoid the consequences of violating the HOS rules. An electronic log book mandate will theoretically eliminate the possibility of forged log books and thereby further reduce capacity by reducing the number of miles currently driven in the market by drivers who don’t adhere to the rules.
Government HOS rules, which went fully into effect July 1, 2013, require a 34 hour
restart period and limit a drivers work week. They directly affect the number of miles
drivers can legally drive. Currently, the HOS rules have been temporarily suspended until September 30 when the suspension is set to expire, unless Congress extends that deadline. When the rules go back into effect, drivers won’t be able to drive as much as they do now. This will eliminate some of the capacity that is currently in the market, and it can leave many shippers scrambling to find trucks.
According to the American Trucking Association, in 2014 trucks moved 9.96 billion tons of freight, which is equal to 68.8% of all domestic freight. Trucking employed more than 7 million people and saw yearly revenue of $700.4 billion, which accounted for 80.3% of all freight transportation spending in 2014. A decline in capacity and the driver pool could not only impact shippers, but the overall economy as well.
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