It’s been a long-standing issue in trucking: how more stringent and more copious rulemaking efforts by the federal government creates an effect known as “regulatory drag” on the bottom line of motor carriers large and small alike – but particularly for the little guys.
For example, take hours of service (HOS) reform initiated back in July 2013: most estimate that regulatory overhaul alone reduced trucking productivity 2% to 3%.
And that’s just one of a myriad of rulemaking efforts – ranging from the Compliance Safety Accountability (CSA) program put in place four years ago to impending mandates for electronic logging devices (ELDs) – that are crimping the industry’s ability to turn a profit; at least the way carriers used to do it, that is.
For example, John Larkin (seen at right), managing director and head of transportation capital markets research for Wall Street firm Stifel, Nicolaus & Co., noted in a speech last month that while total logistics costs in the U.S. dropped dramatically as a percentage of gross domestic product (GDP) since deregulation in 1980 – falling from 16% of U.S. to about 8% today – that trend line has in many ways come to a grinding halt, with regulatory drag as one of the main culprits.
“Part of that is a function of the fact that truck productivity has actually come off its highs earlier in the last decade and seems to be stabilizing at about 2,100 miles per week,” he explained.
“You might say to yourself, ‘Well the driver should be able to drive five days per week and 500 miles per day’ and at that rate, you ought to be able to get closer to 2,500 miles per week,” Larkin noted. “But with HOS changes, the mandatory 30 minute rest stop, and a lot of delay at pick-up and delivery points, most carriers aren’t anywhere close to the theoretical maximum of utilization. That’s stopped the reduction in logistics costs across the country.”
The “micro-managing” of truck drivers under the tighter regulatory scheme contrived in recent years is also contributing to the growing shortage of folks willing to pilot big rigs for a living.
“Truckers feel like everybody, most importantly the police, is on their case all the time,” Larkin stressed. “You can’t go out of the terminal with tire tread depth that’s insufficient or a light that doesn’t work. You really have to make sure that the truck is in great shape, watch your speed, etc.”
He added that truck drivers are micro-managed by shippers and motor carriers, too, in terms of what route they run, where they fuel, where they sleep, when they deliver, when they pick up, and seemingly every detail of their day.
“We are looking over their shoulder on fuel efficiency, on-time performance, and safety performance,” Larkin pointed out. “And we’re taking pictures of them if they accelerate too quickly or decelerate too quickly, or if they swerve to the left or the right.”
On top of that, carriers and law enforcement alike are going to know “everything” about them in the near-future with ELDs being mandated along with new testing for health issues and drug abuse, he noted.
“I’m not sure what the solution is, but it’s not one penny per mile or three pennies per mile more in pay,” Larkin said.
Yet while technology in some respects can be viewed as part of the problem in the above diatribe – indeed, for many drivers, ELD is a three-letter acronym often produces a four-letter piece of profanity – it also can be part of the productivity solution.
That at least is the contention of Newth Morris, co-founder and president of Telogis Route and Navigation.
In a recent column he penned entitled The Elephant in the Room: Improving Business with Technology in the Face of New Trucking Regulations, Morris (seen at left) believes the regulatory “battle” over HOS and driver fatigue can be mitigated with a variety of location solutions aimed at improving driver productivity by reducing wasted time at the loading dock.
“You’re not earning if the wheels aren’t turning,” he said; echoing in his words “a phrase that is industry canon.”
And what two issues tend to further reduce the total number of hours for the wheels to be turning? Tighter regulations and inconvenient wait times at loading docks.
“People often forget that those unnecessary wait times at pickup and receiving locations are taking away much more of a driver’s ability to make money than the upcoming regulations – and that’s the ‘elephant’ in the room,” Morris emphasized.
While he stressed that wait times aren’t egregious at all locations, still many trucks end up sitting still from anywhere from three to 15 hours before unloading.
“This not only smothers a truck’s ability to make money, but it has far reaching effects on everything from future scheduling to a driver’s quality of life,” Morris explained. And while many nationwide retailers are now saying that they will guarantee unloading within a specific window if a truck can arrive at a certain time, that’s proving difficult to accomplish in reality.
“Many receiving docks lack visibility into the status of incoming shipments,” he noted. “A receiving dock may promise unloading within a timeframe, but if 50 trucks arrive at the same time and only 15 docks are available – it creates a logjam. And as drivers wait to be unloaded their HOS clock is still ticking.”
Morris thinks the key to “un-jamming” this process lays in sharing data between carriers and shippers and even between carriers as well.
“Carriers have a fear that shared data will be used against them and that businesses will penalize carriers if they don’t arrive at their scheduled time, be it by being placed at the ‘back of the line’ or monetarily penalized,” he said.
“Similarly, businesses need to understand the ways they can optimize resources at the loading dock by knowing the real time status of incoming trucks and how they can proactively use that data to improve the flow of incoming traffic,” Morris emphasized. “That’s the name of the game: optimizing HOS for the benefit of all.”
That’s where enhanced versions of location technologies come into play, he believes.
“Most trucking companies use some combination of significant routing, navigation and work order management programs to optimize the path taken to get to a destination for optimal use of labor and available resources,” he said. “By sharing some of that information and providing real time visibility into the status of incoming shipments, receiving docks can best marshal their resources to prepare for and efficiently unload the inbound freight.”
And by incorporating HOS data into the information shared with the receiving dock, the receiver is further empowered to make unloading decisions and potentially provide preferential unloading positions to drivers who are facing dwindling driving time.
“It’s not apples-to-apples, but this type of information sharing is currently being used with great success in emergency response efforts related to natural disasters, allowing utilities and the contractors that serve them to better coordinate resources in the effort to get customers back up and running faster,” Morris explained.
“It’s also worth noting that these benefits are not exclusive to helping reduce turnaround times,” he stressed. “Intelligent routing, navigation and work order management technologies can be used to effectively maximize productivity using available HOS data and real-time location of drivers/trucks in the field.”
Then there’s what Morris dubs “intelligent appointment scheduling,” which allows carriers and/or receivers to provide real-time based location and status options for delivery timeframes.
“For instance, the receiver may know that 7:00 AM is a really difficult time to unload because of a backlog, so they may provide three other times throughout the day -- guaranteeing unloading within an hour if the carrier selects that alternate time,” he said. “This can help ease the number of trucks lined up outside of a receiving dock, and allow carriers to send trucks and drivers to a location at times when they know they will be able to be unloaded – optimizing everyone’s resources.”
From where most truckers sit, of course, none of this offers a simple, slam-duck solution – nothing technology-based truly is – but it does offer a way to flip regulatory compliance and driver data monitoring around into a positive asset.
It’ll be interesting to see if the trucking industry – and the shippers/receivers it serves – can make that happen.
