Some characterize the recent regulatory push as 'a godsend' as it restricts the supply of drivers and thus keeps trucking capacity tight. (Photo by Sean Kilcarr/Fleet Owner)

Regulations: A boon to trucking?

May 26, 2016
ELD mandate and other new rules might actually help trucking improve its pricing power, say industry observers.

Could the wide sweep of current and proposed regulatory initiatives now blanketing trucking actually help the industry achieve better long-term positioning on freight rates? That seemed to be the conclusion of more than a few of the speakers at the ALK 2016 Technology Summit held in Philadelphia this week.

“All these regulations are a godsend, for they are another supply-side restrictor keeping the supply of drivers down. We have to take advantage of that,” stressed Mike Krohn, vice president of operations for PGT Trucking.

Take electronic logging devices (ELDs) for starters: the mandate that imposes them on trucking takes effect December 2017, albeit with some caveats, but to the mind of Travis Rhyan, CEO and president of 10-4 Systems, they will affect overall capacity availability throughout the trucking network.

“This is only starting to unfold; it won’t really happen until the mandate is imposed,” he stressed. “But over the next five years, shippers will need to get more progressive; they’ll need to work together more [with their motor carriers] and optimize their operations to a certain point. That should improve margins.”

Dave Osiecki, executive vice president and chief of national advocacy for the American Trucking Associations (ATA), noted that many shippers are “ramping up” the requirement that their “core carriers” install ELDs now so they are compliant well ahead of the regulatory implementation date.

However, the big challenge yet to come is when shippers demand certain time periods for service and those demands push up against a driver’s hours of service (HOS) limit, explained John Spiros, vice president of safety and claims management for Roehl Transport.

“Customers really need to understand the 14 hour rule now,” he said. “They are putting the onus on us [to be HOS compliant] but they need to be more driver-friendly.”

And it’s for those reasons that PGT’s Krohn thinks that motor carriers are “missing the boat” when it comes to pricing their services.

“We are too sedate when it comes to the supply/demand curve,” he stressed. “On the supply side, capacity is flat to down. So most carriers have pricing power; they are just not exercising it.”

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