Truck News | How Will the ELD Mandate Impact Pricing?

08.16.17 | James Menzies, Truck News

When the U.S. electronic logging device (ELD) mandate is fully implemented, trucking productivity could take a 2.5% hit, requiring the hiring of 60,000 additional drivers.

Such a scenario, outlined by industry forecaster FTR, would push truck utilization to about 100%, potentially driving up trucking rates. In a State of Freight Webinar called Preparing for the ELD future, FTR transportation economist Noel Perry expressed doubts that the industry, already struggling to find drivers, would be able to find 60,000 more in addition to the 300,000 it already needs to hire per quarter just to keep pace, especially since additional regulations in the works could further hit productivity and require the hiring of another 20,000 additional drivers.

“Can we hire 80,000 extra people in a single quarter? Normal sources of hiring demand about 300,000, and it will climb to about 375,000 in the first quarter of 2018. That’s a 26% increase. We believe we can’t, so there’s going to be pressure on capacity until they catch up, some time late in the year,” Perry said.

Such hiring spikes have been required before, most notably in 2004 and 2014, when capacity utilization reached nearly 100%. What happened then? Trucking prices spiked.

In 2004, spot market prices rose 15% and contract prices climbed 10%, thanks to a productivity hit incurred by new hours-of-service rules coupled with strong freight demand. In 2014, spot market prices rose 11% and contract rates 4%. One week in 2014 saw spot market prices rise 20% as capacity utilization was at its max.

Already, trucking capacity on the spot market is “scary tight,” Perry said, citing data from and its loads-to-trucks ratio.

“A 20% increase in spot rates is not outside the realms of possibility,” Perry said, looking ahead to the impact the ELD mandate will have on pricing. “Our conservative numbers are, if anything, underreporting what’s beginning to show in the marketplace.”

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