For Shippers, the Good & Bad of Electronic Logging Devices
If you’re in the logistics and transportation industry, you’ve probably heard a lot about the impending transition to electronic logging devices (ELDs). The Department of Transportation has said the new devices must be installed in over the road rigs by December 18, 2017. We’ve reported extensively on ELDs on the LPS blog, in fact. This road to ELDs began about seven years ago when the Department of Transportation first enacted the new rules and recommendations.
For the average shipper or manufacturer with inbound logistics needs, the transition of carriers to ELDs will have little impact on your day-to-day operations, but there will be long-term benefits. Many critics fear there could be far-reaching price increases because driving time by some drivers can no longer be reported through two sets of books in the quest to maximize time on the road. To be sure, some companies have reported a 10 to 15 percent drop in productivity after transitioning to the ELDs, which transmit real-time data to fleet operations that includes average speeds, road time and more. However, most carriers have been able to reduce this loss drastically after using the ELDs for six months.
If you’re a shipper or receiver that’s not currently employing ELD-equipped carriers, you could experience changes that go beyond price changes. These are some several new realities you could experience:
- Carriers unable to drive as far.
- Detention at the shipper will have a greater impact on when the delivery can be made.
- Traffic will play a greater impact on the number of miles a driver can drive: 11 hours per day
- Carriers may look to limit driver’s speed to achieve the optimum MPG for the truck, if this is the first time that data is available to them, which would also limit the amount of miles they can travel.
- Shipping and receiving schedules will need to be flexible.
- Shippers and receivers may have to carry more inventory on hand in the beginning to deal with any delays.
- Non desirable/higher priced lanes may be based on mileage and not necessary location. Around 650 miles (depending on carrier and other factors), and multiples of that, may now be become 1.5 days transit times.
Many of the largest fleets have already begun the transition to ELDs, and smaller fleets are reluctantly installing the devices. But ironically, 97 percent of trucks in the country are driven and owned by organizations that operate fewer than 20 trucks, a figure cited by the website “FreightWaves.”
And, for shippers “paying the freight,” ELDs add another layer of assurance that the carriers you hire are complying with driving laws. Indeed, shippers don’t want to be held accountable if the carrier they hire is breaking the law, like driving too many hours during the day, which could lead to driver fatigue and increased accidents. Under the law, drivers can drive a maximum of 11 hours, followed by eight hours of sleep.
ELDs Will Ultimately Lower Accident Rates and Insurance Costs
Because ELDs will manage driver road time and force drivers to comply with operation limits, accident rates will predictably decline. Indeed, sensing an opportunity to save money on insurance payouts, insurance companies are embracing the arrival of ELDs. “Overdrive,” an industry website, reports that Progressive Commercial Insurance, “To help owner-operators get ahead of the ELD mandate, is offering its customers free ELDs for as long as the driver keeps Progressive as his or her insurance provider.”
As shippers, we can all benefit from lower insurance costs and reduced accident rates. Insurance rates figure into what you’re paying for your freight. And if all that takes is an average investment of $166–$419 per truck for the ELD, then that’s worth the cost. But as one insurance executive contends, “If you’re doing everything right, controlling your [safety] scores, you will be okay,” reports FreightWaves.
The secret to continued adoption of ELDs will be simplicity. EROAD, an ELD designer, and manufacturer, contends that “Devices that are tethered to inside the cab will be much simpler to operate versus ELD apps installed on smartphones or tablet computers.” Also, all stakeholders agree that training will make the difference in the successful adoption of ELDs.
In the end, electronic logging devices are a win-win, for the trucking industry and the shippers that count on reliable, safe and trustworthy carriers.
Here are a few more long-term benefits that will come from ELDs:
Again, lower shipping rates as a result of the carriers’ reduced insurance rates
All carriers will be on a level playing field when it comes to how much time they can drive.
- Reduction of detention time at shippers and receivers, which will make the entire transportation network more efficient.
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