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ELD Mandate: More Changes for Shippers Than Carriers

ELDs are now required for trucks carrying shipments of export cargo and import cargo in international trade.

ELD Mandate: More Changes for Shippers Than Carriers

Much has been written regarding the anticipated impact of the forthcoming electronic logging device (ELD) mandate on truckload capacity. However, comparatively little has been said about the actions shippers can take to mitigate the potential negative effects of the mandate on their supply chains. As the implementation passed earlier this week, shippers should look beyond the perceived compliance rate of their existing carrier base and focus on removing other supply chain inefficiencies, thereby, naturally reducing ELD-related costs and risks. Taking a holistic, long-term approach—often with the help of an experienced 3PL provider—can address the challenges posed by the ELD mandate, and beyond.

The ELD mandate is simply a mechanism that helps the FMCSA more effectively enforce existing hours-of-service (HOS) regulations. Violations can lead to fines, out of service penalties, increased insurance costs, and intervention by the FMCSA.

As the ELD mandate causes less-compliant carriers to improve or exit the market, the remaining carriers (which necessarily prioritize safety compliance) will refuse or otherwise penalize freight that forces them to choose between on-time delivery and HOS violations. These carriers will choose freight from shippers and receivers with schedules and waiting times that permit profitability without risking violations. Over time, this selection process will favor the efficient, organized shippers and receivers, irrespective of current contractual relationships. In essence, the ELD mandate will force shippers to emphasize the value of carriers’ time.

In a tight market for carrier capacity, shippers that improve efficiency will therefore lower their costs and attract the best, most-compliant carriers. Conversely, inefficient shippers will bear additional costs associated with these choices, whether in the form of higher fees or less reputable/experienced carrier capacity (and the additional costs associated with that less-experienced capacity). Importantly, carrier contracts will be of limited value in this reshuffling.

The higher fees are somewhat obvious. For example, a 400-mile run that would have been completed in a day might now take two unless loading times are reduced. Shippers will start paying for that. Similarly, shippers may find that their desired transit times require team drivers or additional fuel, further increasing their transportation costs. The risks associated with less reputable or experienced carriers, while perhaps less obvious, are no less real. Carriers that can’t command efficient shippers probably will be less reliable, less likely to meet delivery windows, or more likely to damage freight or have it stolen.

On the bright side, a shipper–by its own actions–can increase the rate of compliance among its carriers and decrease the costs associated with that compliance by, for example: providing ample lead time on pickups with flexibility on pickup dates and hours; understanding the current market conditions and recent fluctuations; considering the use of drop trailer pools rather than live-loading and unloading; sharing relevant information with intermediary and motor carrier vendors, etc. A shipper also might employ mode optimization (truckload, intermodal, LTL) and align warehouse pickup schedules with product flow patterns, each of which is a big part of this battle. Also, shippers generally should learn to more freely discuss transportation schedules with their receiving customers. A receiver that “needs” a particular load by a particular time on a particular date might reconsider if meeting that need might encourage a carrier to risk HOS violations, impose fees, or yield the business to less reliable carriers. In the post-mandate world, these efficiencies will effectively lower that shippers’ line haul rate, reduce its delivery times, and limit its supply chain disruption.

Of course, carriers and intermediaries share responsibility with shippers and receivers in the endeavor of safely getting the right goods to the right place at the right time. In order to meet the challenges of a changing market, shippers must be both tactically agile and strategically savvy. Perhaps the surest route to a sound strategy is by seeking to create true partnerships with providers. 3PLs can be particularly useful in this regard, as a solid 3PL partner will take a long-term view of your transportation needs and collaborate with you to create a customized solution that reduces costs, improves service, and mitigates risk.

Ideally, such a partnership would include open and proactive communication to provide clarity on volume commitments and priorities. In addition, implementing a transportation management system (TMS) to capture and analyze shipment data and to provide visibility to KPIs is critical. The combination of proactive partnership and actionable business intelligence and drives continuous improvement to help shippers tackle the challenges of today and of tomorrow.

Dan Broderick is general counsel at AFN Logistics, a dynamic third-party logistics provider. Dan has over 12 years of experience in legal, planning, and operational roles in the transportation, telecommunications, government contract, and energy industries.

New ELD mandate for trucks carrying shipments of export cargo and import cargo in international trade.

What Logistics Leaders Need to Know About the ELD Mandate

The Electronic Logging Device (ELD) mandate is expected to go into effect on December 18, 2017, as planned. With the implementation date looming, logistics leaders should consider the potential regulatory and commercial impact of the mandate on their and others’ assets, drivers and operations.

Essential Regulatory Information

First, while the ELD roll-out is being referred to as a “phased approach,” this refers only to the severity of the penalties, not to the requirements themselves. Federal Motor Carrier Safety Administration (FMCSA) officials have indicated that for the period of December 18, 2017 to April 1, 2018, violations will result in fines or citations. After April 1, 2018, non-compliant trucks could be placed out of service.

Perhaps less obviously, ELD-related violations may also affect a carrier’s ability to find affordable insurance. When ELD-related violations force a truck out-of-service, the carrier’s Safety Measurement System (SMS) value will be negatively impacted. Because that value is used to determine a carrier’s insurability, non-compliance with the ELD mandate could cause a costly hike in insurance rates.

Second, while the FMCSA and Commercial Vehicle Safety Alliance (CVSA) have worked to promote a uniform roll-out among state law enforcement agencies, some confusion and disproportional enforcement is probably inevitable. Because the application of fines and penalties could vary, at least initially, stakeholders should understand these differences. Additionally, carriers should be prepared to help educate law enforcement officials. Enforcement officers with varying degrees of training will be asked to read data from a range of ELD devices, and well-trained drivers will be better positioned to expedite the inspection process.

Third, and most obviously, the ELD mandate will not immediately apply to all trucks. A driver who currently uses a compliant Automatic On-Board Recording Device (AOBRD) may continue to do so until December 2019. Also, a driver who is not required by regulation to complete driver logs for more than 8 days during a month may continue to use paper logs. Drivers who conduct drive-away-tow-away operations may also continue to use paper logs, as may drivers of trucks manufactured before 2000.

Next Steps

Carriers should implement driver and back-office training to ensure that employees are well-versed on the ELD mandate. Drivers should know how to access and print out their ELD log from their mobile device or tablet, and they should also retain the ELD user manual in their vehicle at all times, including to assist inspection officers and mitigate potential delays related to inspections.


The ELD mandate will have a significant impact on carriers’ operations, especially in the short term. When choosing when to comply, carriers should consider the fines, penalties, and out-of-service orders associated with non-compliance; the potential impact on safety scores and insurability; and the opportunities that the disruption is likely to create. With thoughtful planning and proactive training, the ELD mandate need not be a barrier to success; rather, carriers that anticipate these issues will capture business while their competitors work through the kinks.

Dan Broderick is general counsel at AFN Logistics, a dynamic third-party logistics provider. Dan has over 12 years of experience in legal, planning, and operational roles in the transportation, telecommunications, government contracting, and energy industries.

Non-compete agreements should be used sparingly by companies that handle shipments of export cargo and import cargo in international trade.

Over-using Non-competes Harms Logistics Employees And Employers

Companies in competitive industries like logistics and transportation must strike a balance between protecting sensitive information and promoting integrity, a trusting culture, and opportunity for young employees. While seemingly minor on its face, overusing non-compete clauses in employment agreements could upset that delicate balance, leading to potential state investigations and negative company image. It also could discourage young talent from entering the industry, which ultimately hurts us all.

The logistics and transportation sector continues to grapple with this issue. In the end, the issue should resolve itself as the industry punishes those who needlessly impose non-competes. But, in the meantime, employees must learn to protect themselves.

Why Most Entry-Level Employees Should Avoid Non-Competes
A non-compete clause (or a covenant not to compete) is a contractual provision usually found in the offer letter or employment agreement. Generally, the employee agrees not to perform work in competition against the employer for some period after leaving. So, the employer can prevent departing employees from working elsewhere in the same capacity or industry.

Non-competes can be a trap for the unwary. Schools mostly fail to teach students about the perils of non-compete clauses, which can dramatically curtail an employee’s right to work. For new hires, who generally lack the awareness to scrutinize their employment agreements, this is particularly dangerous. Even those savvy enough to review their agreements closely often struggle to understand the consequences of violating a non-compete clause – namely that their employer could sue to prevent them from working elsewhere. This is especially punitive for young employees with experience in just one industry.

Although enforcement differs by jurisdiction, employees should assume that their employer will enforce agreements as written. The adage that non-competes are unenforceable is not always true, and in any event, the threat of litigation alone can compel submission or scare off a potential employer.

To be sure, non-competes are often appropriate, including for executives, senior-level employees, top salespeople, critical technology resources and others. This is especially true in competitive industries like logistics and transportation, where non-competes help dissuade competitors from stealing confidential information and trade secrets by soliciting competitors’ employees. Yet, their justification does not regularly apply to younger, entry-level employees who, unlike their senior counterparts, often lack similar access to or control over sensitive information.

There are several ways younger employees can nip potential non-compete issues in the bud. Striking non-competes from employment agreements before signing, limiting their scope or duration, or simply selecting an employer that does not impose non-competes unnecessarily are just a few. Doing so will make transitioning from a first job – whether for more money, more responsibility, or just a change of pace – much simpler.

Employers Should Curtail Non-Compete Use
Overusing non-competes is bad business. Historically, employers injected non-compete clauses wherever possible, reasoning that the restrictive covenant will give them options and leverage when an employee threatens to leave. This anachronistic approach will cost companies in the long-run.

Government agencies have grown increasingly skeptical of these clauses, and companies that overuse non-competes could make themselves targets for costly investigations. Late last year, the White House urged states to ban non-competes for certain workers, reasoning it would create a more competitive labor market and drive faster wage growth. More recently, the Illinois Attorney General settled a years-long case against Jimmy John’s, which agreed to pay $100,000 for over-zealously extending non-competes to sandwich makers and drivers.  Likewise, the New York Attorney General has settled a handful of similar investigations for “unconscionable contractual provisions.”

This activity is not lost on our employees, who may elect to forgo negotiated releases or legal battles in favor of sympathetic state enforcement agencies. Given the state’s power and purse, this is a potentially daunting specter. Costs aside, the negative publicity of such an investigation could punish the company and the industry for years to come, as young talent elects to invest elsewhere.

More importantly, employees in today’s information age are increasingly likely to grow skeptical of employers that aggressively impose non-competes. Millennials strongly value business morality, and nearly half expect to seek alternative employment within a few years. These new recruits are less likely than their predecessors to respect what they consider unfair contractual formalities. They’re also more likely to share negative experiences broadly across social media.

In the short term, companies that abuse non-competes risk swift backlash from media, clients, and prospects alike. In the long term, they risk demoralizing existing employees and jettisoning informed talent, who increasingly refuse to limit their mobility and growth potential. In the end, business leaders who seek over-restrictive protections will embroil themselves in disputes and cease to attract employees capable of driving their businesses forward.

Dan Broderick is general counsel at AFN Logistics, a dynamic third-party logistics provider. Dan has over 12 years of experience in legal, planning, and operational roles in the transportation, telecommunications, government contract, and energy industries.