FTR says ELD command will bring capacity crunch

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After the complete implementation of  U.S. electronic logging device (ELD) order at the end of this year, truck usage could move to 100%, crushing capacity and generating demand for another 60,000 drivers.

In a State of Freight Webinar called Preparing for the ELD future, American transportation consultants FTR Associates suggested that the industry will take a further efficiency hit as a few operators battle to consent to the command and leave the business.

As detailed by Truck News, FTR transportation financial specialist Noel Perry doubts the industry can fill the gap that rapidly.

“We believe we can’t, so there’s going to be pressure on capacity until they catch up, some time late in the year,” Perry said.

Such contracting spikes have been required before, most eminently in 2004 and 2014.

In 2004, spot market prices 15% and contract prices climbed 10%, on account of a profitability hit caused by new hours-of-service rules combined with solid freight demand. In 2014, spot market prices rose 11% and contract rates 4%. As the capacity utilization reached a peak in one week in 2014, market prices witnessed a rise by 20%.Trucking capacity on the spot market is already “scary tight,” Perry said, referring to information from Truckstop.com and its loads-to-trucks ratio.

While anticipating the full effect of the ELD is a long way from certain, Perry assessed an over-the-road truck that is expanding its hours could see a 5-8% profitability hit. Perry additionally noted around 40% of U.S. fleets are as of now utilizing ELDs and will have worked through any hit to their efficiency.

Perry said the most extreme impact of the regulation will happen at some point in late 2018, “assuming reasonable enforcement” of the law.

“The effect at the peak, we think will be 2.5-2.7%, which doesn’t seem like much, but when you consider 3 to 3.5 million trucks and you take 2.5% of that, it equals somewhere around 60,000-70,000 trucks using crude math.”