ELD mandate survey shows small carrier compliance lags larger carriers

The electronic logging device (ELD) mandate has been in the news so much that people have stopped paying attention to it, said Andrew Lockwood, senior manager of supply chain analytics and solutions design for Kenco Group.

“This has been a story out there for two years,” Lockwood said.

On Dec. 18, the mandate will go into effect, and law enforcement can give citations to drivers who violate the mandate. However, drivers and carriers won’t be assigned Compliance, Safety and Accountability (CSA) points, and law enforcement won’t start putting carriers out of service for violating the mandate until April 1.

Recently, Lockwood and Kevin Hill, president of CarrierLists, discussed the results of a small carrier survey on ELD compliance in a conference call hosted by David Ross, transportation analyst for Stifel. About 97% of the 586,000 registered carriers have 20 or fewer trucks, according to trade organization American Trucking Associations, and smaller carriers were less compliant with the mandate than larger carriers.

In September, CarrierLists started reaching out to carriers to see how many were in compliance, and at that time, only 23% of the 633 carriers it had asked had started or were in the process of installing ELDs. Over 12 weeks, CarrierLists reached out to more than 3,200 carriers and found that the data was consistent with the early results in which a low percentage of carriers were compliant with the mandate. Other surveys show similar results. Transplace and Fleet Owner surveys show 67% and 66%, respectively, of small carriers aren’t ready for the mandate. A Morgan Stanley survey showed 30% of carriers aren’t in compliance, but its survey consisted more of larger fleets, Lockwood said.

CarrierLists has published the results of its survey on its website weekly, and as of Dec. 11, 75% of small fleets are ready for the mandate, unchanged from the previous week. Lockwood considered the impact on the industry if drivers left for another such as construction, with spot rates up 22% from last year and a looming driver shortage.

Nearly 90% of nationwide and super regional drivers, or those who drive in a 1,000-mile radius, are prepared for the mandate, while 59% of regional carriers, or those operating in a 500- to 700-mile radius, are ready. More ELD compliant carriers are based in states such as Kentucky, Michigan, New Hampshire and Vermont compared to states such as Arkansas, Louisiana, Mississippi and Oklahoma, according to the CarrierLists survey.

Tank and bulk carriers were the least compliant with the mandate, with temperature-controlled carriers the most compliant at 90%. Dry-van carriers were the second-most compliant at 75%.

Over the past several months, the driver resistance against ELDs has declined, Hill said, and pointed to a recent Kansas rally against ELDs in which the only newsworthy thing was no one knew about it. But for carriers who are ready for the mandate, the next five years could be the “golden age of trucking,” Lockwood said.

The industry is short about 50,000 to 60,000 drivers, and if 1% of carriers leave the industry, that’s 5,860 fewer fleets, not including drivers, Hill said.

“A lot of smaller fleets are still on paper logs today,” he said, and they won’t switch to ELDs until Dec. 18. Many smaller fleets don’t have the infrastructure to train and manage the process smoothly, and the market could be “chaotic” over the next three to six months.

“Shippers are less aware of this potential tightness in the market,” Lockwood said.

Shippers that need freight moved from California to New York might find their load held up in five states because the carrier isn’t ELD ready. Unless one looks at a carrier’s trucks, a shipper has no way to know for sure if the carrier is compliant, Hill said. Also, shippers have started to see carriers ask for rate increases, and “large rate increases have become the norm,” Lockwood said. Lowell-based carrier J.B. Hunt Transport Services sent a letter to customers to expect “10% increases or more.”

Shippers who respect drivers’ time will likely be least affected by the mandate.

“Warehouses have not been efficient with truck driver’s time,” said Lockwood, adding that it’s a point missed by carriers. It might push drivers to take more “drop and hook” shipments, which lack the loading and unloading time a driver would face.

Some shippers aren’t good at loading and unloading, and need to become more efficient, Hill said. The ELD mandate has led some drivers to leave the industry and more are expected to do so, according to a Morgan Stanley survey.

“Shippers/receivers are still not respecting what a valuable resource a driver with available hours represents.”

Brokers, as negotiators between shippers and carriers, can expect a lot of correction, Hill said. If a driver has to wait two hours for a shipment, they are going to expect compensation.

“Drivers aren’t going to let that go in the future. At some point you have to lay down the law.”

Enforcement of the ELD mandate varies by state, Hill said. In Arkansas, law enforcement will document ELD violations during roadside inspections and “may issue citations to drivers” of commercial vehicles who aren’t ELD compliant, according to the Arkansas Department of Transportation. In Oklahoma, the plan was to implement a 10-hour out of service penalty instead of fines. Hill expects California and the Northeast to be the strictest on ELD enforcement.

More than 40 ELD devices have been self-certified, but nearly one-third of them don’t meet the ELD specifications of the Federal Motor Carrier Safety Administration, according to Ross.

“It’s unclear what happens to fleets who bought a ‘certified’ ELD that is actually non-compliant.”

And if drivers start to speed up to run the same number of miles in less time, “we are unsure how law enforcement may use or be able to use ELDs to cite drivers for speeding tickets.” Also, how many carriers can claim the exemption that they operate in a 100-150 mile radius, and “how easy will that be to fudge?”

But Ross doesn’t expect the mandate to lead to the “mother of all capacity shortages.” He expects capacity to tighten and trucking rates to rise.

“One thesis has been that all these small non-compliant carriers running illegally will just fold, but ‘quit rate’ was very low in the survey,” Ross said. “We believe the carriers are likely to raise price before they just turn in the keys and park their trucks for good. But fleet failures or rising rates lead to higher transportation costs. Shippers should be on notice.”