Preparing for the electronic logging device (ELD) mandate is not limited to trucking fleets. During recent media events and earnings conference calls, equipment manufacturers and freight railroads discussed the potential trickle-down effects.
For example, Kenworth Truck Co. monitors the status of the mandate, and talks to customers to try to anticipate build rates, Kevin Baney, assistant general manager for sales and marketing, said in late July.
Baney said ELDs and today’s trucks are linked in the effort to cut downtime. ELDs can help sync information between the driver and vehicle for fleet managers, “providing customers with the best information that they can use to plan their business,” he said.
In response to a question whether the truck itself should be an ELD, Baney and Kenworth General Manager Mike Dozier said vehicle manufacturers must be able to support the numerous devices used by customers. Dozier did predict greater integration of telematics into trucks moving forward, as well as some tech-industry consolidation.
At a Daimler Trucks North America event one week later, Matt Pfaffenbach, DTNA's director of telematics, noted the large number of fleet customers already using their own devices and solutions.
“I could imagine as things progress, there could be a hardware shift toward OEMs,” he said.
Kary Schaefer, DTNA’s general manager of marketing and strategy, also noted the trend of truckers using their own personal devices for business applications. She added truck makers will continue to obtain performance data from vehicles that can compliment what ELDs offer fleets.
On a separate topic, Kenworth’s Dozier said the mandate has the potential to weigh down used truck prices.
If 5% or more of current capacity exits the market rather than use electronic devices, “you will have a larger volume [of used trucks] over a shorter period of time,” he said.
However, Troy Clarke, Navistar Inc. chairman, president and CEO, downplayed the likelihood of this happening when asked about it during the company’s most recent earnings call.
If the supply of used trucks jumps significantly, it could put pressure on pricing, "but I don’t anticipate this year at all, to be quite honest with you,” he said.
The mandate has been a topic of discussion during conference calls of several freight railroads.
Beth Whited, executive vice president of marketing and sales for Union Pacific, projected a truck capacity cut of up to 5%, though she noted some public skepticism regarding enforcement that could skew that figure. Regardless, she said UP was “very optimistic” it would drive up trucking rates giving the nation’s largest freight railroad “an opportunity to convert more volume and hopefully, get some price of our own.”
James Squires, president of Norfolk Southern Corp., had a similar view. “We are very confident that it's going to provide pricing opportunity for us, and it's going to provide volume opportunities for us” in 2018.
Intermodal transportation will see a major boost from the mandate, John Larkin, head of Stifel’s transportation & logistics equity research group, said in a late July presentation to the Truckload Carriers Association’s refrigerated division.
He singled out “tweener” over-the-road lanes as ones to watch in 2018. Using the 800-mile Chicago to New York route, which he said requires a driver to “break the rules” and brokers “to look the other way” to get there in one day.
In the ELD-era, this same route may not require a team or to be pushed to a two-day delivery. He projected larger carriers will adjust to using brokers in order to achieve better lane balance and maximize pricing.
The expectation that the impact of the mandate will play out differently in regional markets was cited by Richard Cribbs, chief financial officer of Covenant Transportation Group. Some shippers are already taking their own actions, setting deadlines on carriers to be ELD compliant, according to David Parker, chairman of Covenant.
The trailer market will also see benefits from the mandate, said Brent Yeagy, president and chief operating officer of Wabash National Corp.
“Assuming implementation as originally scheduled, this mandate will result in capacity tightening, improved pricing dynamics within the industry, and ultimately lead to stronger demand in new trailers,” he said.
