Beginning in early December, failure to have an ELD or AOBRD resulted in a citation, although officials won’t legally start restricting trucks from operating without these devices until after April 1, 2018, for not complying with new transportation laws.
Here I will discuss some anticipated results of the ELD mandate.
1. Driver Shortage May WorsenDriver shortage remains one of the greatest challenges within the transport sector. It is assumed that there will be many drivers who are not comfortable with ELDs due to concerns regarding privacy and other issues, and some will leave the industry as a result. Considering there is already a driver shortage, this is expected to exacerbate the problem.
2. The Affect on Costs:
Compliance Costs Put Additional Pressure on Margins
Compliance costs are anticipated to be an issue but uncertainly exists. Complying with the mandate carries a cost of compliance for those companies that have not already implemented ELDs. The average cost of a basic device is estimated at $40 per vehicle per month. Costs increase as additional features such as vehicle performance and location tracking are added. Approximately $500 a year may not seem like much, but margins in the industry are already tight.
Operational Costs May (or May Not) be Reduced
Over time, ELDs are expected to reduce operational costs as it is anticipated that automating a paper-based process produces cost savings. However, drivers will still be required to maintain supporting documentation that they submit to their employer or keep on file, so any process-improvement savings may be offset. Capacity and productivity are expected to improve, however some carriers, particularly smaller operations that are not fully complying with Hours of Service, are expected to experience a reduction in driver productivity as ELDs come on line.
Shipping Costs Are Expected to Rise
Shipping costs are anticipated to increase given the reduction in capacity related to the ongoing driver shortage and smaller carriers exiting the market.
3. AOBRDS vs ELDs – Save Yourself from a CitationIt is of note that Automatic Onboard Recording Device (AOBRD) units are “grandfathered.” An AOBRD is a device that a motor carrier installed and required its drivers to use before the ELD compliance date of December 18, 2017. A motor carrier may continue to use grandfathered AOBRDs until, but no later than, December 16, 2019. After that, the motor carrier and its drivers must use ELDs. Some concerns have been reported relative to enforcement officials requiring printed reports when drivers are pulled over. However, some of these systems lack the capability to do so, and without these reports or an understanding of the difference between an ABORD and ELD, they may issue a citation that isn’t consistent with the new compliance laws. Educating your drivers about the mandate may help them negate these accusations in a similar situation.
4. Potential BenefitsIt is hoped that improved compliance and driver/vehicle monitoring brought about by the implementation of ELDs should translate into safer roadways, fewer accidents, and lower insurance premiums.
Keep on Trucking with a Trusted Finance Expert
Only time will tell exactly what impact the ELD mandate will have on individual trucking companies and the industry in general. Embracing this change could put an initial burden on your company’s cash flow, but, not only is it necessary to keep business moving, it may also benefit your company over time. In the meantime, consider obtaining working capital from a lender like CCG that stays abreast of industry modifications like the ELD Mandate and understands what this means for businesses like yours. Together, we can make this a small bump on the road, so you can keep on trucking. Contact us today.
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