Small carrier productivity could decline 6 to 10 due to the ELD mandate according to Stifel39s research Photo from PeopleNet

Small carrier productivity could decline 6% to 10% due to the ELD mandate, according to Stifel's research. (Photo from PeopleNet)

ELDs: Predicting the productivity losses

Smaller carriers will suffer the brunt, say analysts.

The trucking industry is expected to lose between 3% and 5% of its overall productivity starting at the end of 2017 when federal regulations mandating the electronic logging devices (ELDs) go into full effect – losses that may soar to between 6% and 10% among small carriers, according to John Larkin, managing director and head of transportation capital markets research at Stifel Financial Corp.

“Roughly half of the [trucking] industry has moved to ELDs at this point; the other half has not and that’s especially pronounced among small carriers, many of whom have not optimized their networks in the first place,” he noted during a conference call with reporters.

Erik Malin, executive VP with consulting firm Carrier Direct, added during the same call that the owner-operator community – which he considers a “major piece of truckload capacity” – is also expected to be “hit hard” by the ELD mandate.

“This may be the straw that breaks the Camel’s back for a good chunk of them,” he said. “Yet a majority of TL carriers may start providing ELDs for free, creating a strategic opportunity for them to ‘onboard’ some of those drivers. But whether we ultimately see a drop off or shift [in the owner-operator population] is difficult to say, but the ELD rule is definitely going to have an impact.”

Larkin believes, however, that it will “not only be hard to teach old dogs new tricks” when it comes to getting owner-operators and small fleets to start using ELDs, but “whether the old dogs can even survive in an era with less flexibility.”

He added that the recent proposed rulemaking issued regarding sleep apnea testing may amplify to the industry’s productivity woes down the road – and potentially sparking further reductions in capacity.

Truck drivers overall are in generally poorer health than the rest of the U.S. population, Larkin noted, so if sleep apnea screening is implemented and vigorously applied “it’s conceivable that it will have more impact than the ELD and [pending] speed limiter rule combined,” he said. “Five to 10 years out from now, we could be looking at 5% to 10% further reductions in [trucking] capacity. We’ll have to see how that pans out.”

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