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An August Regulatory And Enforcement Update From Washington For Trucking

The trucking landscape has been changing, both from within and through regulatory action taken on the outside. As enforcement actions change, part of our job is to keep you informed on anything that could impact the industry we all know and love.

This month’s regulatory update from Washington is no less full of intriguing information as past updates. Each month, new moves from Congress, the Trump Administration, states and/or other major players keep the industry on its toes. Motor carriers have learned to become quick on their feet in adjusting to a new normal.

Let’s first look at the ELD mandate and the new adjustment period announced by the Commercial Vehicle Safety Alliance (CVSA).

The New Adjustment Period

While commercial motor vehicle inspectors can still issue a citation to a truck driver who is not operating with an electronic logging device (ELD) beginning on December 18, they cannot place a vehicle out of service until at least April 1, according to the new guidance.

Of course, even if the vehicle is not taken out of service, the mark would still be notated under the Compliance, Safety, Accountability program and recorded in said carrier’s safety measurement system (SMS) profile.

According to the CVSA, the new phase-in timeframe is designed to encourage compliance, but not in an unreasonable way. While enforcement is still a tool, the agency wants to allow fleets to adjust without creating unnecessary traffic problems or supply chain disruptions.

It is also important to consider that certain aspects of the phase-in plan differ from state to state. When local law enforcement gets involved, it adds to the question of who has final jurisdiction.

Yet, when you’re at the receiving end of a violation, jurisdiction matters little. That this will be noted in the record and followed up on in future inspections matters far more. The last thing a motor carrier wants is a stain of a violation, no matter what that violation is for.

The issue of jurisdiction came up when the CVSA sent a letter to the Federal Motor Carrier Safety Administration raising the question. Specifically, they advocated for a phased-in approach to addressing jurisdiction.

In their letter, the CVSA used the 2004 cargo securement rule as an example of a phased-in approach to enforcement in this case, an approach that likely saved many lives.

Meanwhile, as is often the case in so many of these debates, other industry participants seek an altogether different outcome. In this debate, the Owner-Operator Independent Drivers Association (OOIDA) has come out openly petitioning the FMCSA to delay it even longer than April.

The group points out that many states – a full 26, to be precise – have not yet codified or incorporated the E-log enforcement language into state law. Until then, the OOIDA asserts that there is no enforcement mechanism in place.

According to OOIDA’s Todd Spencer, “We are concerned about numerous states issuing citations for the violation of non-existent state laws. State law enforcement should not be implementing the ELD mandate until they actually adopt the mandate into state law and train and equip their enforcement personnel to enforce it properly.”

It’s no secret that OOIDA has made many attempts in court to block the ELD mandate. Not only has it failed in federal courts, but the Supreme Court has also declined to review it. For these reasons alone, the FMCSA has confidently moved forward with ELDs and coming enforcement and fleets should be too, whether through a phased-in approach or not.

The CVSA asserts that the enforcement community is ready to begin enforcement of the rule on December 18, 2017. Still, will the ELD mandate even take effect?

If so, FMCSA will require that all interstate motor carriers use ELDs instead of paper logbooks. Fleets who are using older ELDs that don’t conform to the new standard – such as AOBRDs or automatic recording devices – will be forced to upgrade, but will have a two-year window in which to do so.

Since the ELD mandate is built upon a congressional component, any major changes to the mandate will have to be passed through Congress. The question now is: How likely is that?

Republicans Breathe New Life into An ELD Delay

Who would have thought, this close to the deadline, even as fleets prepare for it, the ELD mandate might be back on the chopping block? Yet here we are.

When we last reported on it, an ELD mandate was slowly making its way through committee. Now, it appears there is some taste in the House for such a stall after all.

Republican Reps. Brian Babin of Texas, Lloyd Smucker of Pennsylvania and Doug LaMalfa of California recently offered an amendment to the must-pass 2018 fiscal funding bill that would prohibit the Department of Transportation (DOT) from funding any regulation relating to or mandating ELD usage.

Congressman Babin has also recently proposed legislation that would delay the ELD mandate by two years and claims 43 co-sponsors on that bill. How likely is it that the Congressman’s efforts will bear fruit?

When he first introduced the amendment, Babin stated that, “If trucking companies want to continue implementing and using ELDs, they should go right ahead. But for those who don’t want the burden, expense and uncertainty of putting one of these devices into every truck they own by the end of the year, we can and should offer relief.”

Well, to see this amendment go anywhere, the House must first vote to adopt it and then advance the funding bill to the Senate. The Senate would then have to sign off on the House version of the bill and get it to President Trump’s desk for a signature.

If the Senate were to amend the legislation and leave the ELD mandate in place, the House would then have to clear the Senate’s version of the bill and send it on for a presidential signature.

Will It Happen?

While the legislative calendar looks bloated, Congress has until September 30 to get a government funding bill on President Trump’s desk and avoid a costly government shutdown. With House Speaker Paul Ryan recently admitting his conference would “need more time,” it increasingly looks like a stopgap measure will be adopted until something more permanent can be put into place.

President Trump himself has signaled that he would not be particularly opposed to a shut down if there is no funding in the bill to build a border wall with Mexico.

The only thing that is currently known are the number of unknowns. With the ELD mandate looming a scant 3 months away, the regulatory outlook needs to come into focus rather quickly.

A Look at Post-ELD Spot Rates

When the ELD mandate does go into effect in December, there is one thing that many analysts pretty much agree on and that’s a tightening spot market. What’s the result? A likely rise in rates, at least in the short-term.

Further analysis shows that the ELD mandate could result in up to a 7% loss of capacity in the for-hire carrier segment. Overall industry capacity loss is said to total almost 4%. The main driver of this change is the inability of motor carriers to fudge the numbers and spend less time on the road.

This essential “re-benchmarking” of the industry could result in a total of 5 to 15% increase in overall spot rates. Whatever the number is, almost everyone agrees that capacity and spot rates will tighten.

One online survey points to a 2 to 4% rate increase, with some over-the-top “doomsday” scenarios saying we could see a 20 to 25% year-over-year increase during peak season.

In fact, the ELD mandate is already having an impact on the spot market before the implementation deadline happens. As shippers and brokers do their best to procure more capacity, they find it in scarce supply.

The global supply chain has become so fragmented that disruptive events can have lasting impacts. While the ELD mandate – should it pass – could be one of those disruptors, it is likely the spot market would follow more long-term trends.

Motor carriers will become far more precise in how they operate. While some truck drivers and small companies may be priced out of the market, for the most part, large players and companies who have been in the game for a long time will be well-positioned to make the adjustment.

Fortunately, if you look at history as a guide, fluctuations in spot market pricing aren’t entirely new. As an example, tightened HOS rules in 2013 resulted in a 4% capacity squeeze. The polar vortex weather event earlier in 2014 created another capacity problem in the spot market.

Point is, the market has survived volatility before, so there’s no reason to think we won’t come out on the other side of this one in good shape. No matter how you look at it, from the ELD mandate to spot rates and more, it’s been a busy August. Thanks for taking this journey with us and we’ll see you next time with our next update from Washington.

What’s Going On With ELDs In Canada?

With all the talk of ELDs on this side of the border, we sometimes forget that the trucking industry is a North American operation, not just an American one. Our brothers and sisters in Canada are as much a part of the equation as we are.

And yet, despite getting ahead of the game where the Electronic Logging Device (ELD) standard is concerned, regulators north of the border are now struggling to catch up with the United States and have something in place by December of 2017.

Oh, Canada

Even though Canada has been considering the ELD devices since as far back as 2007, work didn’t begin in on a new standard until 2010. With a first draft completed in 2013, the Canadian rule was intended to follow the first ELD rule published by the FMCSA, but it was vacated by a Canadian court on the grounds that there was some ambiguity in the driver coercion clause.

Now, after deciding to wait, they are catching up to the U.S, who is now putting out the final rule. According to the Canadian Council of Motor Transport Administrators’ Compliance and Regulatory Affairs Committee, they believed their initial decision was “justified.”

And even though the final rule was published at the tail end of 2015, Canada was a little burned because the U.S. didn’t involve them in the consultation process. According to a Canadian official, they were flummoxed as to why the U.S. didn’t include them, but reports that the FMCSA is now doing everything they can to resolve some of the differences between both policies.

By the time the final rule was laid out, Canadian officials met to determine what the differences were between the U.S. rule and the Canadian rule from 2013. They also set out to make whatever changes were required to align the two documents. This job was made all the more difficult by there being a significant number of differences between the policies.

Waiting for a Resolution

The final cut of the standard has now been completed and was revealed back in July. Industry partners and others involved in the process were allowed to comment and a final draft will be delivered to government ministers no later than April of 2017.

Although some say the timetable will be very tight, September of 2017 has been mentioned as the absolute final deadline before the Canadian rule must be delivered to the ministers. The extension is born mainly out of the fact that there are quite significant regulatory issues that must be worked through. Such examples include:

  • How to certify the devices.
  • Should current devices remain in service?
  • How should future ELD devices be certified?

Currently, Canada’s HOS rule call for ELDs, but only in a limited scope. Rule makers in Canada will likely need to put a grandfathering provision in place – much like the one we use here in the United States.

At the same time, the FMCSA is requiring that vendors self-certify. Still, they haven’t laid out specific policies or provided tools or test cases for companies to emulate. Individual jurisdictions in both countries are hesitant to set their own certification process, lest they run afoul of the final federal rule.

Yet because of the way the government is set up in Canada, the central government cannot force individual provinces to utilize a mandate applied to carriers operating within a province. The federal government can require ELDs for between provinces, but the provinces themselves must finalize the rules through specific legislation.

So what does this mean for the provinces themselves? While some have come out in full support of mandatory ELDs, others still haven’t bought into the idea and have clearly stated so. There are a number of positions being held, including the federal government’s. It looks like only time will tell how the ELD mandate debate will play out north of the border.

Truckers – Say Goodbye to Paper Logs

Well folks, it’s official, on December 10 the Federal Motor Carrier Safety Administration announced the long-awaited final rule regarding interstate truck drivers and electronic logging devices (ELD). The rule, which will go into effect in 2017, details specifications and mandates regarding ELD usage. The moral? Get ready to say goodbye to paper logs.

According to Transportation Secretary Anthony Foxx, “This automated technology not only brings logging records into the modern age, it also allows roadside safety inspectors to unmask violations of federal law that put lives at risk.”

It’s easy for someone to throw a few soundbites out there, but what does the ELD rule actually mean for truckers? And has the writing already been on the wall for a while now? Let’s dig a little deeper.

A Story of Logs

The fact is, complex logs for on- and off-duty truck drivers have been made with pencil and paper since 1938, and are very hard to verify. Although ELDs originally hit the scene in the 1980s, it’s been a story of trial-and-error regarding their adoption.

Early adoption of ELDs came under a very different Hours-of-Service (HOS) regime. But still, the problem of unexpected occurrences remained.

During the time of paper logs, any delays, whether it be traffic, unloading, or spending too much time in the bathroom, compromised the round trip. If everything went perfectly the trucker would return with a few minutes to spare.

When things went less smoothly, however, truckers could make minor adjustments to their paper logs to account for the irregularities of life. It wasn’t cheating, per se, perhaps only 10 – 20 minutes’ worth of adjustments, but illegal just the same. With ELDs, the paradigm shifts.

A Cautionary Tale

The transition to ELDs will be hardest for smaller fleets that don’t have the capacity to relay or repower loads whose truck drivers have expired the available time on the clock. But even larger fleets have not been without their share of problems.

One well-known 300-truck fleet who does retail store deliveries for big-box retailers implemented ELDs in the late-80s and suffered greatly for it in the beginning. The fleet knew that ELDs would make it impossible to adjust for delays, so they created a video explaining to their customers how the HOS rules and ELDs would impact the operation.

The company also let its customers know it intended to increase its rates 10 percent across the board and pay that 10 percent to its drivers to make up for lost miles or revenue. Furthermore, it announced it was going to add a day to most of its delivery times.

What happened? They immediately lost 40 percent of their business within the first few months, although all of their truck drivers stayed. But within a year, after ELDs became more commonplace, almost all of their customers returned and were happy to pay the higher fee for excellent service.

How to Prepare

The good news is that fleets have between now and 2017 to prepare. They will need to work closely with their customers to ensure a smooth transition without a major loss of business. Small fleets will have to successfully adapt to the new reality and ensure their customers are on board with them.

The fact is little adjustments can add up in a big way. While truck drivers may use a few hours of potential driving time as a result of ELD adoption, the primary question is when those hours will disappear. Quite frankly, it could mean the difference between a quick repositioning or an annoying layover, or perhaps making the delivery one day before you normally would. These kinds of changes can have a net reduction in operating time and make a big impact.

For small fleets who are worried these changes will put their business model at risk, there is one surefire way to make sure the rubber stays on the road. Start logging your paper logs as you are now, while you have a chance to work out the problems associated with no leeway. Don’t wait until the new rule is already here to take the action you should make today.

Hours of Safety and the Federal Highway Bill

With the recent high profile crash between a Wal-Mart truck driver and limousine in New Jersey resulting in the death of comedian James McNair and hospitalization of actor Tracy Morgan, hours of service is back in the national spotlight. And while any accident resulting in death or injury is an absolute tragedy, it can be noted that current fatalities from accidents involving large trucks remains below historical trends, according to the most recent statistics.

Here is a brief recap of the new provisions that were put into effect July 2013

  • Average work week was limited to 70 hours, a drop from 82 hours prior to the change.
  • Establishes a 30-minute break requirement during the first eight hours of a given shift.
  • Provides an allowance for truck drivers who reach the 70 hour maximum of driving within a given week. This allowance allows for a driver to resume provided they have rested for 24 consecutive hours, including at least two nights from 1:00am-5:00am.

The 34-Hour Restart Rule

The new debate surrounds that last provision, specifically the 34-hour restart rule. Days before the accident in New Jersey, U.S. Senator Susan Collins of Maine, as part of her work on the Senate Appropriations Committee, pushed an amendment through that would block the 34-hour restart provisions. In proposing the amendment Collins stated that it is “clear that the rules have had unintended consequences that are not in best interest of carriers, shippers and the public.”

Although the goal of this new rule making was to reduce what the Department of Transportation calls “excessively long work hours,” the DOT also estimates that the new rule could increase annual industry expenses by approximately $470 million. And while they also estimate that there will be an overall net gain of $280 million due to driver health and other mitigating factors, there are other more nebulous consequences to consider as well.

In an interview with The City Wire, Chris Spear, the chief of legislative affairs for the American Trucking Association (ATA) stated that one such consequence of the new rule is that it would increase the likelihood that drivers are on the road during peak driving times rather than letting them drive at hours when there is less traffic on the roads.

Officially the ATA supports suspending the restrictions, though they do support mandatory use of electronic logging devices to track drivers’ compliance with the new requirements. In addressing the recent controversy surrounding the crash in New Jersey the ATA notes that fatigue is a factor is less than 10% of all truck crashes.

The Federal Highway Bill

The DOT estimates that by the end of fiscal year 2014 the Highway Trust Fund will have run out of money. This does not just affect the highways that we use every day in our line of work, but also how the trucking industry is taxed to support continued funding of national infrastructure improvements. While back in May the industry was cautiously optimistic about the Highway Bill, the new 10-month extension has drawn fire from industry groups, with the ATA calling it “ill-conceived.”

The bid by conservatives in the house and senate reduces funding for the federal-aid highway program and drastically reduces the federal gas tax from 18.4 to 3.7 cents a gallon. The worry on the part of industry is what kind of impact these changes may have on state and local government. How the money in the Highway Trust Fund would be replaced is also a matter of contention.

Because congress has been unable to provide long-term stable funding for transportation, the ATA argues that the current legislation would “prove disastrous to state and local governments’ ability to maintain and improve their transportation systems.” Currently the ATA has been joined by 16 national groups, including AAA and the US Chamber of Commerce in opposing the legislation.

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