Logistics and Transportation Industry News Update: 2018 Q1 Highlights

We’re already well into 2018, and a lot has happened in the logistics and transportation industry. The ELD mandate continues to be a controversial topic, we’re keeping an eye on the current capacity crisis, the industry is soaring to new technological heights with autonomous vehicles, and so much more.

Whether you’re a carrier, trucker, or freight broker, it’s crucial for everyone in the industry to stay up to date on the latest news and trends. As a truck driver or carrier, it’s important to know the latest regulations and news so you know how to keep doing your job efficiently (and legally). For freight brokers, knowing what’s going on in the industry can help you manage your loads, keep positive relationships with your carriers, and continue to provide the best support possible.

To help keep you consistently updated on the logistics and transportation industry, we’ve decided to look back on each quarter and roundup the best resources highlighting the quarter’s most important industry news, trends, and happenings. Below are the highlights we found for the first quarter of 2018.

Remember to check back at the end of June for our second quarterly update.

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1. After effects of Phase 2 of the ELD mandate

At the end of last year, phase two of the ELD mandate officially went into effect. From December 19th, 2017 and on, truckers are now required to log their hours electronically via an electronic logging device, or ELD. Now, we’re just a couple weeks away from another important date — April 1st — which is set to be the start of the enforcement and penalty phases.

With the looming deadline, it’s going to be important to keep an eye on those who have been avoiding complying to the mandate hitherto. A few FMCSA officials held a webinar on the ELD rule recently, and FreightWaves has the full recap you can read here. To summarize, the webinar discussed the rules and exceptions to the rule, including the agricultural exemption, uses of AOBRDs throughout the end of 2019, what happens when an ELD malfunctions, hours of service clarifications, and reminding all of the April 1st deadline.

Here are a few helpful resources to keep up to date on all information regarding the ELD mandate:

2. The truck driver shortage

For over the past ten years, the trucking industry has been dealing with the truck driver shortage. Many people believe this is due to age demographics or a difference in generational work ethic. Others claim it’s because the lifestyle of a trucker is often shown as less than ideal — whether it be the long hours, unfair wages, etc. And the recent ELD mandate is not helping the matter.

Whatever the reasons may be, we can all agree that the driver shortage is one of the most critical issues facing the industry. According to the American Truckers Association, “more than 70% of goods consumed in the U.S. are moved by truck, but the industry needs to hire almost 900,000 more drivers to meet rising demand.”

While the shortage has fluctuated over the years, it has yet to come close to a resolution. A recent analysis by DAT Solutions said at the beginning of this year, the available trucks versus the amount of loads was the lowest ratio since 2005. The Chief Economist of ATA said that, “even as the shortage numbers fluctuate, it remains a serious concern for our industry, for the supply chain and for the economy at large.”

So, what is the industry doing to reverse the shortage?

Many companies have to increase the wages of their current drivers to make up for lost hours on the road due to lack of drivers. And by attracting a younger generation of drivers, it might help replace the large number of drivers that are retiring every year.

It’s also been stated that the negative connotations associated with the “life of a trucker” has kept the job in the shadows – and simply increasing the wages and improving the benefits could solve a lot of the problem. In an article in the January 8th, 2018 issue of Transport Topics, Joe Chandler, President of SPI International Transportation, writes, “we have let real wages for drivers decline while paying more to our executives and more for our trucks.”

Plenty of blogs and news outlets consistently report on the ups and downs of the driver shortage. You can find some of them here:

Although the issue remains at a critical level, Supply Chain Dive has high hopes that the current capacity crisis will cause a growing need for drivers. Thus, pushing companies to improve their wages, benefits, etc. to attract more people. Joe Chandler believes since, “drivers are in high demand, [truck] driving should be a natural path forward for many of the nation’s underemployed workers.”

3. The Capacity Crisis

In our post about the crisis from last year, we discussed what it is, what’s causing it, and how businesses can handle the problem. To recap, a capacity crisis occurs when the industry has an abundance of loads, but is lacking the capacity (or trucks) to ship those loads.

Evidence of what’s causing the crisis points to fleet deterioration, loss of truckers with commercial drivers licenses, an increase in government regulations, etc. According to Supply Chain Dive, the ELD mandate and the driver shortage are primarily to blame.

Essentially, the reason there is a low truck supply is heavily due to the lack of drivers available to drive them. And the increased government regulations — such as the ELD mandate — are upsetting many of the already limited number of drivers in the industry. In a recent article by Forbes, it states that, “regulations such as these are…perceived by the drivers as an infringement on personal space [since] many consider their trucks to be a home away from home.”

Read more details on what’s causing the crisis, and how the industry is working to correct it, here:

4. Autonomous vehicles

Recently, there’s been a huge focus on the technology of self-driving, or autonomous, vehicles. It’s particularly popular in the transportation and logistics industries for a variety of reasons. Autonomous trucks can potentially lead to a more environmentally-friendly industry, save money on gas and other truck maintenance, and actually create more jobs — not fewer — for truckers.

Last year, Elon Musk unveiled Tesla’s first electric semi-truck, and Uber Freight recently announced it’s sending a driverless truck on a trip across Arizona. Other companies like Waymo, Starsky, and Embark aren’t far behind.

As technology continues to evolve at a rapid pace, it’s difficult to truly predict how autonomous trucks will impact the industry. We like to stay positive and hope the autonomous vehicle era will bring jobs, help the environment, and improve the way we transport goods. Unfortunately, not everyone agrees with that outlook.

Wired’s article, “What Does Tesla’s Automated Truck Mean for Truckers?” suggests that this new technology could actually worsen the driver shortage, and potentially worsen job conditions (i.e. force 24-hour shifts on employees because the driver would technically be ‘not driving’). It’s also important to mention that Uber is now under fire as one of their self-driving cars hit and killed a pedestrian, marking the first fatality due to an autonomous vehicle. Although this technology has been tested for some time, this is a brutal reminder that it’s still in its infancy.

Ultimately, there isn’t enough research being done yet on the effects of automation, so one prediction is as good as the next. Keep updated on the latest industry technology here:

5. Increasing sustainability within the industry

As previously mentioned, some pros of the autonomous technology would lower the industry’s carbon footprint, use less gas, etc. So, it makes sense that many within the transportation and logistic industries are aiming to implement more sustainable business practices.

The American Truckers Association is committed to establishing a bold sustainability program, and the American Transportation Research Institute shares best practices for sustainable trucking such as driving, vehicle, and public sector practices.

Various companies are making strides towards sustainability, including Mack Trucks’ eHighway prototype, and all of these companies making a positive impact on the environment in 2017.

You can keep track of the companies who are making waves in sustainable trucking practices here:

6. President Trump’s New Tax Law

The ELD mandate is not the only way the government is impacting the industry. President Trump’s new tax law (and “trade war”) are more than likely to affect the industry.

The federal Tax Cuts and Jobs Act that was signed on December 22, 2017 will change how carriers account for buying and selling trucks. According to Transport Topics, “how the law will affect trucking businesses depends on business type.” If you’re a C Corporation, the federal tax bill lowers from 35% to 21%, but it’s important to keep in mind that C Corps have double taxation. S Corporations will choose between the lowest calculation of 50% of W-2 wages, 20% of taxable income, and 25% of W-2 wages plus 2.5% of all qualified property. Many businesses may look into restructuring their business, and sole-proprietorships may need to consider becoming an S Corporation.

Additionally, many are worried about the President’s proposed steel and aluminum tariffs will start a trade war.

Some helpful sources for staying on top of these new stories are:

Recap

Between government regulations and new technology, 2018 is bringing a lot of changes to the world of logistics and transportation. Whether you’re a truck driver, carrier, freight broker, etc., it’s important to be aware of what’s happening within the industry.

Know of any other important industry news or additional resources that we haven’t listed? Share in the comments – we’d love to check them out, too!

trucking-terms-ebook

16 Surprising Facts About Shipping You Should Know

The idea of shipping dates back thousands of years – and today, container shipping is one of the leading means of transporting goods. In fact, it’s responsible for moving an estimated 95% of all manufactured goods around the world.

How did shipping become such an expansive industry?

In 1956, American truck driver Malcom McLean decided to stack 58 metal containers onto a ship going from New Jersey to Texas. The efficiency of transporting goods this way “completely revolutionized the industry,” according to a video from The Wall Street Journal. These containers both protected the cargo and made it drastically easier to unload the shipments. Standard containers allowed the cargo to move from ships onto trucks or trains without being repackaged — a system called “intermodalism,” which saves both time and money.

With the use of intermodalism and other advances such as industry globalization, container shipping continues to dominate the industry. Today, there are billions of tons of cargo being shipped around the world by container ships every year.

Without shipping, we would have far less food and produce in our grocery stores, cars to get us where we need to go, and access to the latest iPhone accessories. For such an wide-ranging industry, it’s surprising how little most people know about it. For example, did you know that over 10,000 shipping containers are lost at sea every year? Or that only 2% of seafarers are women?

Shipping is an expansive industry – and evolving every day – so we understand it might be difficult to always keep up with the latest news. That’s why we decided to share some of the most fascinating shipping facts and statistics we could find. Check out our collection in the infographic below. And if you’ve heard of other surprising facts, be sure to share them in the comments!

shipping-facts-infographic

 

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The ELD Mandate 101: What Drivers and Carriers Should Know

Lately, we’ve had some major industry-wide changes and happenings, like the capacity crisis. And once again this December, we were reminded of the on-going ELD (Electronic Logging Devices) mandate that was published in February 2015. On December 19th, 2017, phase two of the mandate officially went into effect — changing the way truckers log their hours.

Since HOS (Hours of Service) regulations were developed in 1937, there have been various changes to the rules. From paper logging in the 1960s to adapting the logging process to constantly evolving technology in the 2000s. Now, after years in the making, the government-regulated mandate will require all truckers to log their hours electronically.

Even though news of the pending ELD mandate has been around for a few years, 60% of small fleets had yet to install ELDs as of November 2017. That number is even larger for fleets with less than five trucks. Contrastly, larger fleets have been taking the necessary steps to adopt ELDs (if they hadn’t already) since 2016 — ahead of the mandate. With everyone adapting to the ELD mandate at their own pace, it’s difficult to predict the impact the upcoming phases will have on the industry.

Below we’ll discuss what the ELD mandate is, its various phases, some exceptions to the rule, and what truckers and shippers can expect from the mandate.

What is the ELD Mandate?

In early March 2014, the FMCSA (Federal Motor Carrier Safety Association) proposed a rule to require all drivers to use an ELD in place of paper logbooks. An ELD, or electronic logging device, is “DOT-certified electronic hardware that connects to the vehicle’s engine to record driving hours.” ELDs can either be a smartphone, tablet, or laptop, and will replace the current paper logbook system.

The ELD mandate is a rule that will enforce commercial motor vehicle drivers, who are currently required to record their hours of service, to record them using ELDs. More specifically, the mandate is targeting drivers with trucks model year 2000 or newer. Both Canada and Mexico-domiciled drivers are included in the mandate, as well.

The mandate will also cover specifications for ELD manufacturers, how ELD data will be checked by DOT officers, and how and when to store ELD data. Those found noncompliant with the mandate will be issued violations or fined, but not taken off the road (yet).

According to FMCSA (Federal Motor Carrier Safety Administration) drivers are expected to “understand and be able to use ELDs by the required deadline, including how to [annotate, edit, and certify] RODS, and collect required supporting documents.” Fortunately, FMCSA has valuable resources on their website that anyone can download and use to ensure they’re following the ELD mandate thoroughly and properly. It’s also beneficial to understand the different phases of the ELD mandate, so you can understand what’s expected of carriers and drivers at any given time.

The ELD Mandate Phases

Published in 2015, we’ve been expecting these changes to roll out for the past two years. Last year in February 2016, phase one (awareness and transition) was initiated. Now, we’re witnessing phase two: compliancy. The image below shows the current and anticipated timeline of the mandate.

eld-mandate-timeline

Phase one took place over a two-year period from December 2015 to now (December 2017). During this phase, carriers and drivers were aware of the mandate and were expected to prepare to comply with the new regulations by 2017. As we mentioned earlier, some took advantage of this stage and installed ELDs ahead of schedule — but some did not. Although the FMCSA suggested preparing for the mandate, carriers and drivers could still use ELDs, ABORDs, other logging software, and paper during phase one.

Whereas in phase two — which began December 16, 2017 and lasts until December 16, 2019 — carriers and drivers are expected to comply with the mandate. While AOBRDs (or Automatic On-Board Recording Devices) are allowed in lieu of official ELDs throughout phase two, other logging software and paper logs are not. However, drivers and carriers are still required to keep supporting documents (in both paper and digital format) as of December 18, 2017.

Although phase two is focused on compliancy, the enforcement and penalty phases are actually postponed until April 1, 2018. Meaning drivers will not receive points against their compliance, safety, and accountability (CSA) score if they fail to meet the ELD requirements until April 1st. However, drivers can still be given warnings (or possibly a fine) if they don’t have an ELD or grandfathered AOBRD when pulled over between now and the first of April.

The third and final phase is predicted to take place after December 16, 2019. From then onward, all drivers and carriers will be held responsible for complying to the official ELD mandate — overruling any current exceptions to the rule.

Exceptions to the Rule (Prior to Phase 3)

As we know, there are exceptions to most rules — and the ELD mandate is no different. There were many exceptions throughout phase one as the industry was preparing for the mandate to officially roll out. Now that we’re in the beginning of phase two, there will be less exceptions as to who does or doesn’t have to comply to the mandate.

Paper logbooks will no longer be accepted for any carrier or driver. Carriers and drivers must be using an ELD unless the carrier or driver already installed “grandfathered” automatic on-board recording devices (AOBRDs). But keep in mind, this exception will no longer be effective as we enter phase three on December 16, 2019. Between now (December 2017) and mid-December 2019, any drivers who don’t have an ELD, or aren’t grandfathered in using AOBRDS, will be considered noncompliant.

Back in November 2017, the FMCSA stated that “agriculture loads and livestock will receive an additional 90 days [beginning after December 16, 2017] to comply.” This gives agriculture haulers until mid-March 2018 to install and begin using ELDs.

The FMCSA also shared a post to their website in August 2017 listing additional exceptions to the mandate that include drivers:

  • Who use paper RODS for 8 or fewer days out of every 30-day period;
  • Whose vehicle registration reflects they were manufactured before the model year 2000;
  • Who conduct driveaway-towaway services
    • E.g. the vehicle driven is the commodity being delivered; or the vehicle being towed is a motor home or recreational vehicle trailer with one or more sets of wheels on the roadway

What to Expect

The ELD mandate shouldn’t be a huge surprise to anyone who’s been following the industry for at least the past two years. Despite the time to prepare, we can expect phase two (and even phase three) to cause a disturbance for drivers, carriers, ELD manufacturers, and others within the industry.

Training drivers to switch from paper logs to ELDs is “very detail specific” — it’s more than just installing a new device into your truck. Drivers and carriers will have to adjust to the changes that come along with the new technology. For example, drivers are required to take a 30-minute lunch, but if your watch differs from the device’s time it may only clock you at 29 minutes – which is technically a violation. It’s small details like this that all drivers will need to get accustomed to throughout the transition. Shippers may also have to adjust to minute details. An example would be having to count the time it takes drivers to maneuver and park as work time. With no give in the schedule, carriers may expect a 4 to 5% productivity loss for various haul lengths.

Not all expectations for the ELD mandate are negative, however — there are many benefits as the mandate goes into effect. While the transition may still have kinks to work out, ELDs will definitely make it easier (and quicker) to record HOS. Since interstate HOS rules remain the same, you can quickly download a driver’s report within 30 seconds during an inspection. They’ll also limit mistakes, improve scheduling to limit fatigue, and keep driver logs accurate and orderly.

Recap

When it comes to industry-wide changes, education is your best defense. By keeping up-to-date with the current phases and exceptions to the ELD mandate, you’ll be able to better prepare. Although it’s unclear how strict officials will be during phase two, it’s still best to start installing your ELDs as soon as possible.

So, set your calendars for April 1, 2018 – because that’s the day officials can mark points off your CSA score in addition to giving out warnings or fines for being noncompliant. If you’re feeling ambitious, you can even set your calendar to remind you that phase three will be released on December 16, 2019.

And don’t hesitate to check out the FMCSA site if you have any uncertainties about the regulations drivers and ELD manufacturers need to start following.

What You Need to Know About the Capacity Crisis of 2017

Between 2003 and 2005, the United States was emerging from a recession — causing constant flux in the trucking industry quarter to quarter. Recently, many fear that 2017 and 2018 are in as much of a crisis (or worse) as we were back then.

So, what exactly is the capacity crisis?

A capacity crisis is when the industry has an abundance of loads, but there isn’t extra capacity (or trucks) available to ship the loads. For example, in 2003, the ratio was seven trucks to every one load. Today, it’s seven loads to every one truck. Essentially, there are too many loads with not enough trucks available to transport them.

This is considered a “crisis” because with no extra capacity available, prices will be extremely competitive — and logistics providers are under intense scrutiny to manage it all.

JUMP TO THIS: What You Need to Know About the Capacity Crisis of 2017 [INFOGRAPHIC]

What’s causing this crisis?

The high demand for trucks is not the only reason we’re facing a capacity crisis. In our opinion, there are four leading causes: fleet deterioration, loss of truckers with commercial drivers licenses (CDLs), poor economic conditions, and an increase of government regulations. Let’s break these points down further.

As the economy fluctuates, not all fleets come through unscathed. Many businesses cut costs by scaling down their equipment. Some trucks and trailers are repurposed, but many remain neglected. According to Inbound Logistics, there are 190,000 U.S. trucking companies with less than twenty trucks. That, on top of the loss of drivers, may lead to an increase in rates for 2018.

Over the last few years, the driver shortage has steadily worsened, and 2018 won’t be any different unless some changes are made. Drivers with CDLs are either retiring or non-existent. The median age of a driver is 55, and continues to climb. Michelle Rafter wrote in an article for trucks.com that “the lack of higher pay…is leading drivers to quit, particularly long-haul drivers…[and] age restrictions are prompting millennials to bypass the industry in favor of jobs that are better paid and not as heavily regulated…” This combination of aging drivers and lack of interested millennials to take their place is fueling the driver shortage.

We also have to take into consideration the unpredictable setback that the 2017 hurricanes and fires caused the market. Any way you look at it, the economic conditions aren’t faring well for 2017 and the upcoming year. Jeff Tucker, CEO of Tucker Company Worldwide, said “today’s massive hurricanes in the Caribbean, in Texas and Florida have had a more adverse effect on the market than the Bush 2003 tax credit…and to make matters worse — the ELD mandate is upon us.”

With increased regulations like the ELD (Electronic Logging Device) mandate, many trucking companies can’t meet the requirements in order to stay in business. Currently there are about twenty laws impacting transport costs, and the ELD mandate going into effect this December is only adding to the crisis. Inbound Logistics reported that those who have adopted ELDs have had a 10% reduction in logged miles.

How can you prepare your business?

In past years, we’ve seen truck shortages after Hurricane Katrina in 2005 clear up within months, but have also encountered capacity problems in the winter that take until the summer to right themselves. This year, we not only have endured Hurricane Harvey, but Irma and forest fires throughout the U.S. as well. It’s nearly impossible to predict the exact outcome these natural disasters — along with the increased government regulations and driver shortages — will have on the industry.

The best anyone can do is prepare as much in advance for the capacity crunch as possible. If you can remain as flexible as possible in the coming year, and build (and maintain) a strong network of committed carriers, you should be able to handle whatever this capacity crisis throws at you.

To help, we’ve collected facts and statistics about the capacity crisis that you’ll want to keep top of mind as we end 2017. If there’s any other crucial facts or information we’ve left out, please let us know in the comments!

 

capacity-crisis-infographic

 

 

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