The December 2017 ELD mandate was expected to reduce capacity, raise rates, expose costly detention, and accelerate industry consolidation, while fully autonomous highway trucks remained years away.
Industry leaders discussed regulation, economics, technology, and M&A at the June 22 Trucking Owners Business Roundtable in Nashville.
Massive Consolidation Coming?
The ELD mandate was scheduled for Dec. 18, 2017. Stephens analyst Brad Delco estimated that strict enforcement could reduce for-hire capacity by 7% because small carriers and owner-operators could no longer extend driving time with falsified paper logs.
That reduction represented about 56,000 trucks, or 3.7% of total industry capacity when private fleets were included. In a $700 billion truckload market, it equaled $49 billion of capacity—roughly the size of LTL and domestic intermodal combined.
Small carriers would also lose a mileage advantage while large fleets retained scale benefits. Delco therefore expected substantial consolidation over the next two to 10 years if the mandate was enforced.
He also described ELDs as a possible “shock and awe” event that could end the freight recession by tightening supply and lifting rates.
ELD Data Could Reduce Detention
TCA government-affairs leader Dave Heller expected a “data explosion.” ELDs would show carriers and compliance reviewers which shippers and receivers were wasting driver hours.
A 2014 FMCSA and Virginia Tech study found average detention of 3.4 hours, compared with the conventional two-hour standard. J.B. Hunt estimated that solving detention could add 44,475 driver miles per year.
MAP-21 gave FMCSA authority over parties that coerced drivers to violate hours-of-service law, but it was unclear whether detention qualified. Additional congressional action might be necessary.
Implementation challenges included identifying noncompliant devices and the different enforcement approaches adopted by individual states.
A Changing Acquisition Market
M&A panelists expected ELDs to encourage consolidation and improve rates. A company seeking a buyer needed to be compliant before the mandate.
Private investors without transportation experience were entering the sector. The market was not as hot as several years earlier, but a well-performing company could still find a favorable time to sell.
Buyers valued strong management, a good business model, defensible niches, and strong regional density. Sellers needed to be prepared, flexible, and transparent.
“Surprises kill deals.”
Uncertainty creates delay, and delay can kill a transaction.
Autonomous Vehicles? Not Yet
Panelists believed autonomous trucks were many years from broad highway use. Early applications were more likely in controlled environments such as ports.
Technology still had to handle unexpected road conditions, cybersecurity, accident liability, and a legal and regulatory framework that did not yet exist.
The near-term certainty was the ELD mandate. Autonomous fleets remained a longer-term possibility, and the changing market would reward carriers prepared to adapt.