Short of the commercial deregulation of trucking in 1980, arguably no single federal-regulatory action has hit motor carriers harder in one fell swoop than the reboot of the hours-of-service (HOS) rules for truck drivers that went into effect last July 1.
Six months on, aspects of the HOS rewrite by the Federal Motor Carrier Safety Administration (FMCSA) are still stinging carriers and drivers alike as well as their customers. And, says research drawn from the real world, stinging them good and hard.
The issue, say trucking advocates, is the safety agency’s unnecessary and consequential tinkering with the rule’s 34-hour restart provision. The upshot is that for over six months thus far, use of the restart has been limited to once a week—and it can only be triggered if 168 hours have elapsed since the last restart. What’s more, the restart can be clocked only if two rest periods covering 1 a.m. to 5 a.m. are included. FMCSA also added a requirement that drivers take a 30-minute rest break during the first eight hours on duty.
No honest broker can dispute that FMCSA engineered these contentious changes to HOS in keeping with the agency’s mandate to improve highway safety by regulating how commercial vehicles are operated. But trucking’s lobbyists, as well as executives of individual motor carriers and industry suppliers, warned well before last summer’s rollout that the new rules would be doubly problematic.
That is to say, the long-haul segment of over-the-road trucking knew before the compliance hour struck that the HOS changes would provide little in the way of a safety dividend while driving up operating costs.
FMCSA had estimated the HOS changes would produce a benefit of $133 million annually for trucking. But the American Trucking Assns. (ATA) calculated the tighter red tape would cost the industry $189 million a year collectively—from lost productivity alone.
According to Rick Schweitzer, general counsel of the National Private Truck Council, the results of an NPTC membership survey done a few months after the HOS changes became law revealed that of 10 fleets responding, nine reported being “adversely affected” by the re-jiggered reset; eight said their productivity had declined; and six noted that they’d begun paying drivers for rest breaks.
Truckload/logistics giant Schneider National reports that, as of late October, it’s incurred a 3.1% drop in solo shipments along with a 4.3% decline in team shipments since July’s HOS implementation.
And, per Dave Geyer, Schneider’s senior vice president and general manager-van truckload, that productivity hit has not been offset by any uptick in safety–related numbers.
“Safety performance dramatically improved under the previous rules, and there is no evidence to support that changing the rules has improved safety,” he advises. “Feedback from drivers is consistent: They do not feel better rested as a result of the rules change. Just less productive.”
Fatigue is the tip of the driver iceberg. Geyer regards HOS reform as accelerating the trend toward drivers deciding “the lure and independence of the open road are no longer worth the pay and regulatory pressure they are now facing. Driver turnover is trending up and is back at pre-recession levels.”
“Based on calls to our ‘hot line,’” relates Tim McCrady, senior director of customer service for Omnitracs, “the 34-hour reset has been the most confusing rule to understand.” He says the stress of dealing with that “could have a negative impact on a driver’s health and safety—just the opposite of the rule’s desired outcome.
“Simplifying the [restart] process may reduce that stress, which, in turn, could help mitigate the driver shortage,” adds McCrady. He also notes that “carriers will need to implement programs to mitigate losses in driver pay as well as to keep driver stress factors low to reduce turnover rates.”
“I believe costs added to the supply chain eventually always hit the consumer,” remarks Christian L. Schenk, senior vice president of solutions provider XRS Corp.
“The challenge I have with this rule is it doesn’t appear to be reducing risk or costs in other areas,” he continues. “I meet with fleets every day and I have not met one who agrees with these changes. The reports show a 12% decrease in efficiency since July, which is massive and certainly expensive.”
Fast-forward to several months after implementation, and the bad news really began rolling in. For example, John Larkin, managing director & head of transportation capital markets research for Stifel, Nicolaus & Co., reports that a recent survey on the HOS changes showed that 80% of truckload carriers were experiencing a loss of productivity and 67% of truck drivers a drop in wages of 3.2% to 7.7%.
The biggest salvo fired back as of press time came in November. A detailed report released by the American Transportation Research Institute (ATRI), a trucking-allied research organization that is well-respected outside industry circles, amounted to a scathing indictment of how the rules have gone wrong.
The 60-page document panned the HOS changes for seriously impacting the financial health of motor carriers along with their truck drivers and logistics providers.
What’s more, the report found that where it counts, out on the road, the new regs have not only failed to measurably improve highway safety, but have caused safety deficits.
Black marks
Those black marks include drivers reporting increased fatigue generally since the rules were implemented and the “restorative benefits” of mandatory rest periods being depleted by having more often to take off-duty time away from home.
“Trucking is not a ‘one-size-fits-all’ industry,” ATRI noted in the report. “Even so, there has been a clear, measurable and generally negative impact to a significant portion of the industry resulting from the July 1 HOS rules implementation.”
Going further, the institute stated plainly that its report “demonstrates clear evidence that the rules have generated a financial consequence on individual drivers as well as motor carriers, the majority of whom are small businesses.
“The financial impacts are realized through decreased earnings for drivers, decreased efficiency and productivity for carriers, and, as trucking capacity tightens due to an increasing driver shortage, increased rates for businesses that ship goods,” the institute emphasized.
“Finally, the commercial vehicle ‘shift’ to congested time periods creates new crash risks and costs that have not yet been quantified by FMCSA,” ATRI added.
Released nearly back-to-back with the ATRI report, a membership study of over 4,000 truck drivers conducted by the Foundation of the Owner-Operator Independent Drivers Assn. (OOIDA) determined the HOS rules are affecting their ability “to drive while rested, operate their businesses efficiently, and make a living.”
The negative effects of the changed rules cited by the study include increased fatigue and stress, less income and home time, and spending more time driving in general as well as in congested traffic.
About 46% of the drivers reported feeling more fatigued since the changes in hours of service and 65% said they now receive less income. The OOIDA report also found that the single 34-hour restart per week had caused 56% of the respondents to lose mileage and loads hauled each week.
Drivers surveyed related having incurred long wait periods between loads and then being unable to click a restart because the 34 hours did not cover the two nighttime periods or because 168 hours had not elapsed since their last restart. In general, the report showed this forced drivers to lose time at home, which led them to take on shorter hauls and earn less income.
“The agency’s insistence on micromanaging a driver’s time is actually undermining highway safety,” notes Todd Spencer, OOIDA executive vice president. “Instead of providing the flexibility to drive when rested and stop when tired, the new rules have put drivers in the position of driving more hours than ever and in the worst traffic conditions, and spending less time at home. How is that safe?”
“The rules need to reflect the fact that drivers have to accommodate numerous factors they have no control over such as weather and traffic,” he adds, “in addition to the schedules of shippers and receivers, who don’t have to comply with any regulations at all.”
To be sure, the analysis contained in ATRI’s “Operational and Economics Impacts of the New Hours-of-Service” report along with the data compiled by OOIDA are potent ammo for any campaign to lobby Congress to force HOS revisions that would address trucking’s concerns.
Looking to Congress
American Trucking Assns. (ATA) president & CEO Bill Graves has stressed the importance of gaining widespread support on Capitol Hill for a bill dubbed the TRUE Safety Act that would stay the new rules until an independent review can be completed. The bill was introduced in October by Reps. Richard Hanna (R-NY), Tom Rice (R-SC) and Michael Michaud (D-ME).
“The TRUE Safety Act will put the brakes on these rules until they can be thoroughly vetted,” Graves states. “We’re confident that once they are independently and objectively reviewed, FMCSA will have no choice but to undo what it has done.”
It’s unlikely that Congress will do anything before it receives the results of the mandated restart “field study” being conducted by FMCSA.
NPTC senior vice president Tom Moore says it is “hard to say when that will come out; sometime in the spring at the earliest.”
“We expect the restart study to come out in the spring,” advises David Heller, director of safety & policy for the Truckload Carriers Assn. (TCA).
The Subcommittee on Contracting and Workforce of the House Small Business Committee conducted a closely monitored hearing on the impact of HOS on small businesses. The congressmen grilled FMCSA administrator Anne Ferro on what HOS hath wrought.
“In Congressional testimony, Administrator Ferro said she hoped the study would be released by the end of Q1 2014,” advises Rob Abbott, ATA’s vice president of safety policy.
Subcommittee Chairman Hanna noted in his opening remarks that the latest highway reauthorization bill required FMCSA to conduct the aforementioned study on the 34-hour restart and that it remains unfinished, even though Congress intended for the study to be completed before the agency adopted the new restart provisions.
“Most disturbingly, there is a case to be made that the rule does not only cause economic harm, but may also make our nation’s roads less safe,” Hanna said at the hearing.
He suggested that by adopting a restart that bars operations for two evenings and ends at 5 a.m., “FMCSA is, in effect, pushing truckers onto the road at earlier times in the day, during the morning and evening commute and school rush hour, prompting safety concerns.”
Building on Hanna’s point about more trucking amidst congested roads, Rice stated there was no evidence that FMCSA took that dynamic into account, and he questioned the data used to support even the 19 lives FMCSA estimates the HOS rule changes will save each year.
“The 34-hour restart that was thrown out by the court had far less study than the one in place now,” Ferro told the subcommittee. Pushing back against the importance of the overdue study, she said that the original restart “had one—and only one—study justifying it: a study conducted by the American Trucking Assns. funded by a Congressional earmark.”
Along with the Small Business Subcommittee’s hearing, legislation passed unanimously by the House and Senate in October requiring FMCSA to address sleep apnea among truck drivers only with a full rulemaking could be a sign that the bellwether TRUE Safety Act might actually get passed at some point.
But Capitol Hill watchers put the chances of any legislative rollback of the HOS rule’s provisions happening anytime soon as a very big “if.”
“I don’t know where the TRUE Act will go,” TCA’s Heller says frankly. “But the [Hanna] hearing in November went a long way toward pointing out that FMCSA should have done a better job of putting the [revised HOS] rule out in the first place.”
“It’s difficult to say [if or when] Congress will pass the TRUE Act,” says NPTC’s Moore. “However, the industry is doing its best” to make that happen.
“The legislation stands a good chance in the House,” contends ATA’s Abbott. “It will be more of a challenge in the Senate.”
“Substantive [legislative] change [to HOS] is unlikely due to the popularity of truck-safety regulation with the driving public,” remarks Noël Perry, managing director & senior consultant of FTR Associates.
As of press time, the measure had been referred to committee, but the likelihood of it passing was pegged at quite slim indeed by the law-tracking website www.govtrack.us. The prognosis posted for the TRUE Act gave it a “27% chance of getting past committee” and a “7% chance of being enacted.”
Regardless of whichever way the political winds blow that remedy, there are actions fleet owners can take now and during the foreseeable future to mitigate the higher operational costs of HOS compliance— not to mention that of any decline in their safety performance.
Some avenues to consider pursuing include:
- Performing more split-loading or relaying of long-haul freight
- Adding more team drivers
- Lining up delivery windows more sharply
- Paying existing drivers more
- Hiring more drivers
- Switching to electronic logging devices (ELDs)
- Investing in technology to precisely match dispatching with HOS rules
“How carriers can mitigate the HOS impact is easier said than done,” admits ATA’s Abbott. “But certainly, the keys are advance planning and communication with shippers, as the rules are less flexible.”
According to FTR Associates’ Perry, ways carriers can mitigate the negative aspects of the HOS rules include:
- Re-engineer routes to eliminate awkward timing for 34-hour restarts.
- Increase governed speeds to get more miles before a restart.
- Turn down freight that results in restart problems.
- Work with shippers to coordinate the availability of freight to the availability of capacity.
- Work with customers to reduce waiting times at docks.
- Raise rates in a very visible way so that other carriers will follow suit.
Manage through it
As for what carriers can do if rate hikes are not forthcoming or to get through the lag before higher rates up cash flow, Perry says that beyond “grinning and bearing it, [they should consider] delaying capital spending and discretionary maintenance.”
Matthew Menner, senior vice president of strategy for 3PL provider Transplace, advises that he has heard of “many carriers using the situation brought on by the HOS changes as an ‘entree’ to a discussion with their shippers on gaining some rate relief.
“Shippers are pushing back on that,” he continues. “But not rejecting it out of hand. Rather, they are requiring the carriers to present data to back up why a rate hike is necessary.”
Putting a philosophical spin on the real-world reality that is HOS, Omnitracs’ McCrady rightly observes that “one thing is certain, change is inevitable.”
“The changes in the HOS rules require carriers to look for ways to mitigate the impacts,” he points out. “To be competitive, carriers will need to have a good handle on their operations.
“More than ever,” McCrady adds, “real-time communication and actionable information will be a key to managing a trucking business.”
Time, money—and fatigue
The highly detailed, nearly 60-page-long analysis contained in the “Operational and Economic Impacts of the New Hours-of-Service” research report prepared by the American Transportation Research Institute (ATRI) lays out evidence of just how the HOS rules have impacted trucking.
As to its thoroughness, ATRI said the report, prepared by senior research associate Jeffrey Short, was based on survey data of over 2,300 commercial drivers and 400 motor carriers as well as the logbook data of over 40,000 commercial drivers. The institute said its findings apply to three prime areas: driver pay, carrier productivity, and highway safety.
Key operational and economic impacts identified included:
- More than 80% of the motor carriers surveyed have experienced a productivity loss since the new rules went into effect—with nearly half stating that they require more drivers to haul the same amount of freight.
- Among commercial drivers surveyed, 82.5% indicated that the new HOS rules have had a negative impact on their quality of life—with more than 66% indicating increased levels of fatigue.
- Drivers are [being] forced to drive in more congested time periods, although the FMCSA Regulatory Impact Analysis did not address increased safety risks with truck-traffic diversion to peak-hour traffic.
- Majority of drivers (67%) report decreases in pay since the rules took effect.
- Impacts on driver wages for all over-the-road drivers total $1.6 billion to $3.9 billion in annualized loss.
As to drivers reporting a drop in pay since July 1, ATRI pointed out that those losses “could be attributed to myriad factors” related to the HOS rule changes, including:
- Schedule changes to meet requirements of the restart provisions
- Increased restart times
- Reverting back to use of a “rolling schedule”
- Lost loads due to decreased flexibility
- Rest-break requirement increasing unproductive on-duty time (e.g. ,finding truck parking)
ATRI said these are the “key carrier outcomes that result from the HOS changes”:
- More drivers required to move same amount of freight. To comply with the HOS rules, carriers have shifted driver schedules. Many of these new schedules have resulted in a decrease in the number of weekly miles a driver can log. Due to the decrease in miles, carriers have a choice of turning down freight or making up the miles by incorporating additional drivers and/or equipment into their operations. These options are less efficient than operations prior to the new HOS rules, and are a central component of the productivity loss.
- Driver shortage/turnover. Prior to the July 1 HOS rules, qualified drivers were scarce, with an estimated shortage of 20,000 to 25,000 for-hire truckload drivers. As a result of the changes, more drivers are required and the level of scarcity has increased. To attract drivers after the HOS change, some carriers have opted to increase pay and some may increase rates for shippers. Rate hikes are challenging, however, due to strong competition among industry participants. If rate increases do not fully compensate for driver pay increases then carriers raising pay will assume an additional financial burden.
- Decreased flexibility to meet customer requirements. In particular, drivers are limited to one restart per week and must take those restarts across two nighttime periods. Shippers, however, may require delivery at any point on a given day—and with little notice. The data shows, particularly data describing the variability in driver weekly work time, that flexibility has decreased. As a result, drivers are less able to accumulate hours for unanticipated shipper requests via the 34-hour restart. In many instances, carriers must either turn down business or increase driver capacity.
As to the safety impact, ATRI stated that while the “goals of the July 1 HOS changes were to make the existing rules even safer,” what has instead happened is that “drivers have indicated increases in fatigue since the rules were implemented.”
The institute also shared these safety-related findings:
- Drivers and carriers remain uncertain about the enforceability of the new rules.
- Evidence points to the rules having increased time working and time away from home for many drivers. Some drivers have indicated that due to the rest break requirement, for instance, typical work day lengths have actually increased. Nearly 20% indicated an increase in on-duty time, though miles and pay have decreased or remained constant.
- Others have indicated that due to the changes, off-duty time has been required away from home more often, thus decreasing the restorative benefits of the rest period.
