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New ELD deadline: Will it trigger a capacity crisis?

  • 20 Mar, 2019
  • Donald Broughton

Freight markets were upended by the capacity crunch that followed the electronic logging device (ELD) mandate in December 2017. The next phase of the mandate begins in December 2019, and it may end up being just as disruptive.

The new milestone expands the regulation in two dramatic ways:

1. No more AOBRDs

The ELD requirement becomes more stringent in December. Fleets will no longer be allowed to deploy the Automatic On-Board Recording Devices (AOBRDs) that were "grandfathered in" for the first two years of the ELD mandate. Carriers with AOBRDs were considered compliant, but now they'll need to switch.

The biggest difference is that ELDs must include devices that are "intrinsically integrated" into the truck’s operating system. Some AOBRDs were cell phone apps that didn't plug in, and those will soon be non-compliant, including many of the legacy systems from companies we all think of as the dominant players in the industry. I estimate that more than 50% of the 3.5+ million Class 8 trucks now in commercial use will be required to replace or significantly upgrade the ELD system they are currently using. That could force some big changes in driver behavior and in fleet operations.

2. Smaller trucks are included

The ELD mandate has always included every trucks in commercial use, not just Class 8 semi-trailers. Class 3 through Class 7 are also covered, including FedEx, UPS, and Amazon delivery trucks, as well as your local utility and plumbing contractor. When they travel 100 miles or more from their home terminal, they'll all need to have an ELD device that meets the more stringent requirement of being intrinsically integrated into the truck’s operating system. Until now, if a delivery driver maintains an electronic log, it is almost always on a cell phone or other device that is not intrinsically integrated. There are more than 3.7 million of these trucks in commercial operation, and I estimate that more than 60% of them will need to install a compliant ELD or risk being fined whenever they travel more than a couple of hours from home.

Will the new ELD deadline cause another capacity crisis?

The answer is a definite maybe.

Back in 2017, there was a full-on panic in the industry about the ELD mandate. I was one of the few who predicted that the mandate wouldn't have a lasting impact on freight transportation. I reasoned that the mandate was well publicized and the industry had ample time to prepare for it. As it turns out, I was right. There was some disruption in early 2018, to be sure, and a short-term impact on rates. By the third quarter of 2018, however, most fleets had adapted to the new technology, and the end result was not as dramatic as expected.

This time around, however, the mandate will be extended to an even larger population of trucks. The upside is that the improved technology will eventually lead to an even more efficient marketplace. But in the short term, there's still one very big problem. No one is talking about it. A surprisingly large percentage of the industry is unaware of the looming change in ELD requirements. As a result, no one is making plans to address it.

As a friend said on the eve of the Y2K "crisis" in the computing world: "Calamity well anticipated, seldom is, but calamity not anticipated can be a disaster."

Source:- DAT.

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