Declare Your Transportation Independence!
Over the past several months, we have been bombarded day in and day out with political news, events, and even non-events related to the upcoming presidential election taking place this coming November. Regardless of which side of the political spectrum you find yourself, I would submit that we can agree on one thing, and that is that the federal government continues to add rules, regulations and new requirements on the transportation industry.
While these rules, regulations and mandates, (RRM’s) etc. are not inherently bad or evil, the cumulative effect of these government dictates by faceless, unelected bureaucrats has often times led to decreased profitability, increased costs and decreased efficiencies in the transportation industry. While their intentions should never be disparaged or necessarily ridiculed, the continued flow of new requirements, regulations, and whatever else, will continue to add costs not only to the trucking industry, but also to the cost of shipping goods from one point to another. And will also increase the landed per unit cost of your garden variety type widget.
So, as a division of the U. S. Department of Transportation, the Federal Motor Carrier Safety Administration (FMCSA) regulates nearly ALL aspects of the trucking industry. For example, truck drivers are limited by the number of daily and weekly hours they can drive, and even the roads and highways they may drive upon. It is of paramount importance that collectively we know and understand the following standards and regulatory changes currently taking place in our industry. Below are but a few of the new requirements that have either been implemented this year or are due to be implemented in the very near future.
Compliance, Safety and Accounting Initiative (CSA). This initiative was designed to reduce accidents and risk throughout the industry, however the actual rules of CSA vary quite a bit and manipulation of these rules does indeed take place. Despite this, the FMCSA is set to continue using these rules and possibly even expanding them. While the goal is lofty, implementation and utilization of the rules needs to be consistent with fewer loopholes which can be exploited for unfair advantage.
Hours-of-Service (HOS). This will continue to be a focal point during the balance of this year and beyond. In a nutshell, drivers will be required to include at least two, four-hour breaks in a 34-hour restart period. It has been speculated that this requirement could lead to a growing driver shortage, affecting primarily over the road drivers and over the road trucking companies along with the shippers that rely primarily on an over the road distribution model.
Electronic Logging Devices (ELD’s). This mandate, when fully implemented will have a bifurcated purpose; to reduce driver fatigue and workload concurrently. Drivers no longer have to take the time or worry about documenting their hours of service manually, since it is done electronically. From a personal perspective I can attest that ELD implementation is easier said than done, especially when trying to program the device with the Hours of Service requirements so that the ELD properly identifies and keeps track of the correct hours based on the HOS regulation.
Driver Coercion. Traditional methods of operation in the transportation and logistics industry have focused on departure to delivery times, driver anti-coercion measures will make it risky, if not illegal, to require drivers to deliver a given shipment within a specific time frame. Imposition of such on drivers could lead to penalties and monetary fines.
Greenhouse Gas Emissions Standards. The EPA will continue to monitor and recommend changes to the emission standards of commercial vehicles. Their excuse/reason for this apparent overreach of power is to force standards on commercial vehicles which are supposed to be designed for better operating efficiency which will lower the cost of fuel.
So, what can we make of all this? If you recall, last month we identified five major points that are extremely relevant to the transportation industry this year. If you analyze the five (and only the five that I identified above) government mandates for this year and for the near future, the following begins to make more sense.
Bankruptcies doubled in Q1 2016 as compared to Q1 last year. These bankruptcies took 3500 tractor-trailers out of the market. Expect more bankruptcies as the second half of the year unfolds.
And finally, expect to find a disturbing trend of a decrease in new tractor orders along with cancellations of existing tractor orders. Along with this we are finding that there are fewer new trailers and containers being manufactured as well.
I know that I probably sound like a broken record (do they still make those these days?) regarding the need for implementing a “Balanced Transportation Program.” But with increased regulations continuing to squeeze the trucking industry, over-the-road capacity will soon begin to tighten and the pool of qualified over-the-road truck drivers will also begin to decrease. There couldn’t be a better time to begin looking at diversifying an over-the-road distribution program to one that includes intermodal options as well.
The continued threat of additional rules and regulations is always just around the corner, and these dynamics will more than likely continue to add cost and inefficiency to an already capacity constrained segment of the industry. Being aware, and cognizant, of what is currently transpiring in the transportation market is one aspect of what is needed in order to make the right adjustments for you and your company. Another aspect is of course working with knowledgeable and trusted partners that can offer ideas and solutions that will work best for you and for your customer’s needs.
Vince Castagno is client solutions manager at Integrated Distribution Services.