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Trucking struggles: Trucking demand vs new restrictions in hours
One of the most crucial elements of the transportation supply chain is ground freight. In 2016, trucking moved 10.55 billion tons of freight, representing nearly 71% of all tonnage moved in the U.S. However, new driver regulations have affected carrier capacity, scheduling, and pricing.
Recently, the Federal Motor Carrier Safety Administration (FMSCA) implemented an updated Hours of Service (HOS) law, which drastically reduces the number of hours truck drivers can be on the road. It requires drivers not to have been on duty for more than 14 hours and not to have driven more than 11 of those hours. Once they have reached the maximum allotments of time, they are required to stop and rest for a minimum of 10 hours. They track their on- and off-duty hours using new Electronic Logging Devices.
As of April, the industry is four months into the first compliance period. Many worry that the HOS requirements will reduce carrier capacity during a time of tightened delivery schedules. For drivers, electronic logging is a huge operational and cultural change (paper logs have been in use since the 1930’s.) They also face the challenge of delivering goods on time while maintaining lean inventories. Their job depends on the distance traveled, but now they have to do it with severe constraints on time, meaning they can’t take on as many jobs. With 3.5 million truck drivers in the U.S. manning more than 33 million registered trucks, there is a lack of labor as it is.
Both domestically and internationally, the economy is healthy, and orders for manufactured goods have been steadily increasing. Because of the high number of shipments, the trucking industry is having trouble keeping up with import demand. This has caused the entire supply chain to be less efficient and more costly. First, there is less capacity available because drivers are spending more time in their trucks. In addition, there are cases in which one carrier can no longer afford to handle a shipment to its final destination, so forwarders have to find multiple carriers to complete the delivery. This creates a struggle between finding trucking companies and/or drivers at the right rate who can get it done in a reasonable amount of time. This can get very costly very quickly. Forwarders such as IFF are negotiating the best routing plan that will not eat into your margins nor increase detention time.
For the short term, the only thing shippers and buyers can do is be patient. The change impacts our entire industry across the board. There will be an adjustment period as trucking companies implement the new system; shipper schedules will be affected, which could trickle out to other modes of transportation (especially if you are used to shipping LTL). However, in the long run, this policy will be better for our roads and our drivers. They will be more productive, make supply chains more efficient, and help highway safety.