The ELD Mandate and its Effects on Carrier Behavior
The first quarter numbers are out, and the transportation industry has seen major changes since passage of the ELD Mandate. While load-to-truck ratios and shipping rates have reached record highs, productivity has been drastically reduced. The new laws and requirements have had a dramatic effect on carrier behavior. This has consequently made it more difficult for shippers to get their products delivered according to their desired schedule. It is important to understand why certain decisions are being made on the carrier end as a result of these changes.
The electronic log books generally provide little room for error, so drivers are being far more discerning in the loads that they are willing to haul. Because they must meet tighter deadlines or risk being shut down and losing their next load, they are avoiding shipments that are susceptible to detention issues and longer loading times. This is a major problem in the grocery and produce sectors, so shippers in those parts are seeing rates go up and capacity decrease. Some drivers will flat-out refuse grocery shipments from certain shippers based on their reputations for detaining drivers. Increased rates on that shipment may not be enough to offset the potential loss of their next shipment as a result of detention.
There has also been a decrease in capacity for “borderline” lanes, or routes where the mileage is right on the cusp of the one-day or two-day barrier. ELD restrictions mean that drivers can’t make the mileage overnight, and their load may spill over into a second day on a shipment that used to take only one day. Major lanes like Chicago to Nashville, Philadelphia to Atlanta, and New York to Cleveland have all been affected by this. Carriers are asking for rates that are sometime more than double what they used to receive in order to make up for lost revenue while waiting around to finish these shorter lanes.
Another major change is in the market for dedicated runs. With pricing on the rise and capacity decreasing, carriers can pick and choose from the spot market and make more money than they used to with static runs. Market volatility has contributed to this, and it correlates heavily with the passing of the ELD mandate. Shippers should do themselves a favor and brush up on the spot market if they haven’t already, as these trends are likely to continue into the future. It may be a difficult time to adjust to these changes in the market, but as carriers have felt the effects of the mandate, they are more aware of what they need to do in order to remain profitable. If you need guidance on how the ELD mandate can affect your supply chain, start today with Zip Xpress