We continue to read and hear that this winter may be the most frustrating shippers have experienced in several years. Capacity issues and higher spot market rates are expected to continue into the new year. And with the higher spot markets, we can expect to see contract rates follow the same path. As might be expected, many of the capacity issues will revolve around driver shortages. According to a recent study by the American Trucking Associations (ATA) the driver shortage is increasing and is expected to exceed 50,000 by the end of the year. Most of us have read about the letter J. B. Hunt sent its customers, warning of increases of 10% or more as the Electronic Log Device (ELD) implementation adds more fuel to the existing driver shortage fire.
After several years of controversy and challenges, the effective date for ELDs is fast approaching (December 18) and most industry watchers are predicting productivity losses of 4 – 7%. This is a little hard to understand since most of the major truckload carriers have used ELDs for several years, and are well past the learning curve. The biggest impact apparently will be on the smaller carriers and thousands of owner – operators in the U.S. transportation network. The latter group is suspected of routinely fudging on their hours of service thereby driving longer than they should; and ELDs will make cheating almost impossible. (Ironically, the smaller carriers stand to benefit most from ELDs and the efficiencies they are expected to bring to their systems.)
Whatever the impact of the implementation, most agree that it will exacerbate the capacity problem. Some experts are predicting that older drivers may even quit driving rather than work with the new system. This would be especially true for the already financially stretched owner – operators who would have to dig into their own pockets for the recorders.
Industry analyst John Larkin of Stifel, warns, “Expect a three ring circus when the ELD mandate is implemented on December 18.”
ELDs aside, if the economy continues to grow and carriers are unable to attract new drivers, tight capacity will continue to drive rates up. This would be an excellent time for shippers their c contracts and cement relationships with their carriers. Most important, treat your drivers and carriers well. It goes without saying that shippers and receivers that do will experience fewer problems than those that don’t. Keep in mind that for the time being, it is going to be a carriers’ market.