But, costs could recede somewhat after an initial transition period, according to grain company professionals and trucking industry analysts.
“We’ve seen tighter capacity, and we’ve seen rate increases,” said Ken Bisping, director of transportation and logistics at Grain Craft, Chattanooga, Tennessee, U.S. “Over the holidays, it was a struggle, and there was a little panic over capacity, but that’s subsided a little since the first of the year.”
Those in the grain industry have felt the transportation capacity crunch, meaning there have been fewer dry trailer vans available for freight. That’s partially because small trucking operations cannot or do not want to comply with the new regulations. For larger carriers, delivery times have increased, in some cases splitting what had been a one-day run into two days of travel time as drivers adjust to meet the off-duty hours and hours-of-service requirements.
Large flour mill operations are coping with the changes by delaying some shipments and paying increased rates in the short term.
“If I have a regional flour mill with, just for example, 50 loads to deliver, that might normally require 15 trucks,” Bisping said. Because of truck shortages, “somebody’s going to be short somewhere. So, maybe we ship at a later date, maybe we pay a premium to ship it now. It’s worked so far, and we’re doing what we can to curb the extra costs the best we can.”
Some milling companies have tinkered with carrier partnerships, seeking to strengthen the relationship in order to keep rate increases under control.
For Grain Craft’s bagged flour business, “we’ve had to change a few carriers as we try to get our processes and strategies in line,” Bisping said. “Basically, we’re partnering with carriers and looking for long-term relationships in hopes of down the road keeping costs under control.”
Merchandisers coordinating logistics for the delivery of millfeed say some trucking firms have begun to differentiate shipping rates based on origin and delivery facilities. Use of older facilities that lack the capacity for inbound trucks take more time to load and now command a premium because electronic logbooks already are recording hours before drivers hit the road. That’s raised rates at well-managed, modern facilities as well.
“One carrier told me he basically lost one day of driving,” Bisping said. “If you lose a day, you have to find a way to compensate.”
But the situation should improve over time, said Gordon Klemp, founder and president of The National Transportation Institute, a publisher of trucking industry data.
“We’re in a transition time and have seen from 5% to 12% capacity lost,” Klemp said. “The old metrics are out. Some older routes and runs don’t make sense now.
“We are predicting somewhere around 7% to 9% loss of capacity for the last three quarters of 2018. We will get some efficiency back when drivers get used to using it.”
A bigger issue according to Klemp is a growing driver shortage.
“From 2001 to 2016, the average GDP growth was 1.8%, and we ran out of drivers,” Klemp said. “For the past 10 years, the driver shortage has been covered up by the terrible economy. It was hiding behind poor GDP growth. If we get 3.8% GDP growth, there is a big shortage coming.”
One factor contributing to the shortage is years of pay decreases after adjusting for inflation, which has steered potential truck drivers to the gig economy (including app-based car services such as Uber and Lyft), fracking and traditional oil operations, and disaster rehabilitation work.
“There is no fresh talent, no millennial truck drivers,” Klemp said. “They don’t want to do loading and unloading. The average age of a trucker is very high. The flat rate/no-growth economy has attracted anybody.”
The new regulations have garnered mixed reaction from the trucking industry.
American Trucking Associations (ATA), the industry’s largest national trade association, has backed the rule and touted its benefits, including the end of “burdensome” paper logs that take extra driver hours to complete and are more susceptible to fraud.
“We firmly believe that America’s truck drivers — if they were operating legally within the hours-of-service rules before today — will see tremendous benefits in using an ELD,” said Chris Spear, president and chief executive officer of the ATA. “Whether in reduced crashes, less time spent on paperwork or in fewer errors in their logbooks.
“The data, as well as our members’ experiences, with this technology tells us that ELDs reduce crashes, increase compliance with the hours rules and ultimately benefit our industry and the motoring public.”
The new regulations, which require full implementation by March 1, are the result of a bipartisan congressional highway bill passed in 2012. A rule requiring use of electronic logging devices (ELDs) were first proposed in 2007.
Other groups believe the rule’s negative consequences outweigh its advantages. The Owner-Operator Independent Drivers Association (OOIDA) supported a November request by the Indiana attorney general seeking a delay in the federal mandate for ELDs on commercial vehicles.
“The mandate provides no safety, economic, or productivity benefits for most ensnared by the mandate, which includes businesses that are not in trucking, but rely heavily on trucks as their business models,” said Todd Spencer, executive vice-president of the OOIDA.
Among that group’s primary concerns is a lack of clarity on which of the nearly 200 available electronic logging devices will be compliant with the federal mandate.
“Most small-business truckers can ill afford to make these purchases only to learn later that their ELD is non-compliant,” Spencer said. “Yet they are required to do so or risk violation.”