The Impact of Electronic Logging Devices: Separating Hype from Reality

“I was forwarded an analyst email that said ‘ELDs are coming, the world is going to end, capacity is going to disappear, rates are going to go up 25 percent…’ I’m exaggerating a little bit, but not much,” said Ben Cubitt, Senior Vice President, Consulting & Engineering at Transplace in a recent episode of Talking Logistics. He was referring to some of the hype and speculation surrounding the electronic logging devices (ELDs) mandate, which goes into effect in December 2017.

The reality, however, is that the vast majority of large carriers are already ELD compliant, according to a survey Transplace conducted last year with over 400 carriers. Eighty-one percent of large fleets (those with more than 250 trucks) reported that they had achieved full ELD implementation, with the remaining 19 percent working towards implementation. “A lot of these large carriers have been using ELDs for multiple years,” said Cubitt. “They’ve worked out the kinks and have learned how to plan better, so for large carriers, this is a non-issue.”

Data from recent transportation procurement engagements support the survey findings. “As we’ve been doing bids, we’ve been asking carriers if they have implemented ELDs, and if not, what their plans are,” said Cubitt. “One recent example is a paper and packaging shipper with 134 carriers in the bid. Of those carriers, 103 had more than 250 trucks and 93 of them had already implemented ELDs, with 5 planning to implement within 90 days, 2 within 180 days, and only 3 were planning to implement beyond the 180-day period. So again, 95 percent of the large carriers in this bid for this particular shipper were already [or soon going to be] ELD compliant.”

Simply put, ELDs have been an operating reality for large carriers and their shipper clients for several years, so much of the cost and impact has already been baked into the market.

That said, small carriers (those with less than 250 trucks) have been much slower to implement ELDs. According to the survey results, only 33 percent of small carriers have fully integrated ELDs into their fleet. Another 29 percent have begun the implementation process, while the remaining 38 percent have no immediate plans to begin implementation. Data from transportation procurement events mirror these results.

Why have small carriers lagged behind large carriers in implementing ELDs? Part of the reason is that many carriers took a “wait and see” approach as legal challenges worked their way through the courts. The mandate was ultimately upheld by the 7th Circuit Court of Appeals in late October 2016. Concerns about cost is another factor, but as Cubitt discusses in the short clip below, the cost to implement ELDs is actually not that large, and it may be less of an inhibiting factor than other things, such as fear of losing independence.

Another big question is whether the ELD mandate will cause carriers and drivers to leave the industry. Based on the survey results and the experience of large carriers that have already implemented ELDs, the impact to date has been minimal. “All of the large and medium carriers that have implemented ELDs have drivers for their trucks — none of them have reported that ‘Hey, I can’t put drivers in 40 percent of my fleet because of ELDs’ — there hasn’t been this mass exodus of drivers,” said Cubitt. 

What does this all mean for shippers? As Cubitt discusses in the clip below, in order to minimize or eliminate any potential negative consequences from ELDs, shippers and carriers need to communicate and collaborate more effectively, and for shippers, adopting carrier-friendly practices becomes more important too.

“For example, 24/7 operations becomes much more important,” says Cubitt.” If I’m a carrier with ELDs and I’m going to be controlled by hours of service, I need to maximize the efficiency of my drivers, so if you’re a shipper that only allows pickups or deliveriees between a tight window, that becomes a challenge.”

I encourage you to watch the rest of my conversation with Ben for additional insights and advice on this topic.

What’s been your experience with ELDs? Is your carrier base already ELD compliant or are many of your carriers still sitting on the sidelines? How important is ELD compliance in carrier selection? Post a question or comment and keep the conversation going!