ELD Can Bring a New Dawn in the Trucking Sector
Electronic logging device (ELD) is an electronic hardware synchronized with a trucking engine to record driving time, measure accurate hours of service (HOS) compliance and keep Record of Duty Status (RODS), per the Federal Motor Carrier Safety Administration (FMCSA).
The regulation aimed to eliminate paper log books as they presented auditing challenges due to logs filled in multiple locations, making it hard to access data and locate specific entries. There is delayed submission of log books and drivers spend a lot of time in filling up the information. Whereas, ELD helps the driver to update and maintain records, provides accessibility of stored data and specific log entries, and tracks drivers’ compliance. Further, ELD switch is expected to eliminate paperwork costs by USD 1.6 billion annually.
The decision to make ELD mandatory originated to prevent drivers manipulating driving hours on paper log books. The devices linked to the engine capture the truck movement and record the driving time. By law, the daily driving limit for drivers is 11 hours. Per the American Transportation Research Institute (ATRI), truck drivers driving beyond the legal 60-70 hours of service are ~45-50 percent more likely to be involved in an accident than those in compliance. Increased driving hours lead to fatigue in drivers, which results in accidents. Per FMCSA estimates, installation of ELD devices could prevent 1800 accident crashes, 550 injuries and save 25-28 lives annually by keeping fatigue drivers off-duty.
Positive Implications for the Trucking Industry
The commercial transportation industry is divided on ELD and there has been an ongoing debate about it. Moreover, the major argument prevailing in the industry is around the higher costs of ELD devices, unaffordability of ELD costs driving the exit of smaller players in the market and the higher freight costs. However, according to GEP, these are myths and not expected to majorly impact the road freight industry.
- ELD costs - Per FMCSA, the average annual cost of ELD is USD 495 per truck, whereas, online applications charge USD 20 per month with no upfront costs to integrate it with the engine computer. Therefore, cost of ELD devices are not high, as stated in certain secondary sources.
- ELD adoption in the trucking market
Source: Trans place, 2016
However, GEP estimates that currently over 90 percent of the larger carriers (over 250 trucks) are already ELD compliant and have implemented ELD devices in their trucks.
- Freight costs - As mentioned in certain secondary sources, freight costs are expected to increase by ~4-6 percent.
However, the math of the ELD is that if 140,000 miles are driven on an average per truck (paid freight miles) and even if the cost is USD 1000 a year per ELD, it works out to USD 0.0071 per mile. If the market bears USD 2.00 per mile, then it is less than 0.3 percent. Hence, ELD costs are negligible and are not expected to drive higher trucking freight rates.
- ELD extension
The deadline for phase II implementation was December 18, 2017. However, per recent announcement, the Commercial Vehicle Safety Alliance (CVSA), an agency responsible for enforcing ELD, extended the ELD implementation deadline till April 2018. It means vehicles without an ELD installation would be permitted to drive on roads and drivers would not be out-of-service till April 2018. Beginning April 1, 2018, drivers would be placed out-of-service by the regulatory officials and penalties would go up to USD 11,000 in case the vehicle is not equipped either with an ELD device or automatic onboard recording device (AOBRD).
AOBRD could be used until December 16, 2019. However, it will lose its compliance value after the set date. The ELD extension has provided time for trucking carriers to install ELD and get adjusted with the new mandate.
According to GEP, commercial carriers would be subjected to mandatory ELD installation beginning April 1, 2018 and they would eventually have to adopt it. However, there would be some commercial carriers who would be exempted from the rule dependent on a case-to-case basis. But ongoing driver shortage is expected to intensify due to the restricted driving hours and the labor rates expected to increase. ELD installation would be beneficial to the trucking industry and shall ensure lesser accidents and safer commercial transportation of cargo and passengers.