Shippers have to realize that many of the transportation fundamentals they base their supply chain on are going to radically change under new HOS rules, and that LTL and intermodal service may become more attractive alternatives, says Dick Rogan, Exec. VP-Sales & Marketing for third party logistics provider the Hub Group.
“At the moment, what we have is a fair amount of confusion. Shippers are aware of HOS changes but unsure of what it means to their business,” he says. “What it means, however, is that truck transportation is going to become more of a time-based business rather than mile-based, business, so shippers are going to have to pay more attention to the clock.”
In the past, Rogan says, driver wait times were typically not compensated. Carriers simply had to absorb that cost as part of doing business. Now, he expects most carriers will offer one hour of wait time free to their customers and then start charging on the order of $80 per hour after that – and up.
“Charges for extra stop-offs will go up as well – doubling or even tripling in some cases,” he says. “So as time becomes a more critical ingredient in a truckload carrier’s cost, we may begin to see some freight shift to other modes.”
Rogan thinks multi-stop truckload business – which makes up only 10% of truckload freight overall – may begin to shift back into the LTL market. Also, shippers are beginning to look at using short-haul and regional intermodal services, too.
“Intermodal service today is primarily used in 2,000 to 3,000 length of haul segments – essentially cross-country moves,” he says. “Now, though, we’re seeing more potential to use 800 to 1,000 mile intermodal services, and that’s a big change.”