As many of you already know, the recent ELD mandate has had a significant impact on the freight shipping industry. Shippers are having to pay more to move freight and driver compensation is following a similar pattern. All of this is occurring alongside a steep rate increase in spot van rates; the national average has gone up 35% year after year and is now at an all-time high. Contract rates have risen 10% over the same period and could go higher still.
A significant pay-hike for drivers will accompany the anticipated 10% truckload rate increase over the next two years. Although it’s difficult to get a precise reading on the specific effects the ELD mandate will have on carrier-driver interactions, it’s expected that driver compensation packages will be much higher than in the past. Not all drivers and fleets have implemented ELDs yet, there are still some late adopters trickling in. It’s going to be hard for shippers and receivers to move product.
The ELD mandate is forcing carriers to take a second look at how they’re taking care of their customers. ELDs focus on faster loading and unloading times as well as improved safety and easier tracking. We’ll see larger shipping companies start prioritizing partnerships with fleets that support drop-and-hook trailer operations while other shippers will end up paying more, tweaking their service requirements, or adjusting dock practices.
So, where does this leave freight brokers like Atran? Well, we’re working hard at keeping friction between shippers and carriers to a minimum. The implementation of the ELD mandate is forcing drivers and carriers to be more honest about their available hours. The loading and unloading process will need to be improved as well. These tighter restrictions will force a fundamental change in freight rates, making it so that carriers will be paid by the hour, not the mile. Driver sign-on bonuses will rise and performance-based pay will disappear.
The trucking industry in 2018 will be driven by a stronger economy and the growing nationwide trucker shortage. While driver recruitment and retention have always been an issue in the trucking industry, the ELD mandate has made it a bigger issue than ever. It’s still too early to say exactly how the relationship between carriers and drivers will change, but some level of change is inevitable. In previous years, economic growth and market conditions allowed large fleets to scrape by with fewer drivers by conserving miles with relays and regional or intermodal runs. That won’t be possible anymore.
A DAT study found that “borderline” one- or two-day round trips will be the most affected by the ELD mandate. Traffic jams or poorly timed breaks can result in the driver running out of hours before they can complete the miles planned for that day. Credit lines are also expected to be adjusted upward for brokers who need additional coverage as a result of these sharp rate increases.
Huge changes are on the horizon for the freight industry, and you can count on freight brokers like Atran to be there moderating the tension between carriers, shippers, and drivers.