Electronic logging devices reduce the room for operating outside hours-of-service limits, but their data can help carriers identify unproductive loads and adjust pricing, routing, and utilization to protect margin.
The ELD mandate was scheduled to take effect later in 2017. Its operational consequence was a loss of productivity as drivers' hours became more closely aligned with hours-of-service rules.
The Federal Motor Carrier Safety Administration estimated that 4.1 million power units fell under the mandate. In its rule analysis, the agency projected that ELD adoption by the end of 2016 would reach 22% among long-haul commercial vehicles and 7% among short-haul vehicles.
The Expected Productivity Loss
Transportation economist Noël Perry of FTR Associates estimated that early ELD adopters initially experienced a 4% to 8% productivity loss in over-the-road operations. The loss could reach 12% for carriers that had deliberately disregarded hours-of-service requirements.
Requiring all truckers to use ELDs removes the competitive advantage a carrier might gain by violating work rules. Once legal productive hours are the same for everyone, pricing may become more rational.
Time is perishable. A carrier must maximize the margin generated within the available time if it wants to remain competitive.
ELDs Also Produce Useful Data
The data produced by ELDs can help carriers make informed changes to lanes and prices. Perry cited Schneider as a carrier that worked through the productivity loss and improved pricing, and KSM Transport Advisors clients reported similar experiences.
The operating constraint remains legal driving time, but a fleet can still improve how those hours are used.
Find the 'Tweener Loads'
One method is to identify tweener loads: freight that takes two days to deliver but produces only one day of revenue or margin.
To maximize productivity and revenue, a carrier needs to know where a load crosses the boundary between a one-day movement and a two-day movement. It also needs enough revenue on a one-day load to create an acceptable margin.
Those break points are specific to the carrier's pricing and operating performance.
Examine Revenue and Margin by Length of Haul
A carrier can group freight into length-of-haul bands and compare revenue per day, cost per day, and margin per day.
The client dashboard discussed in the article showed a margin squeeze in the 300- to 600-mile bands. Loads in that range were difficult because they consumed too much delivery time for the revenue they generated.
Every carrier's chart will look different, but all carriers should examine their 300- to 600-mile freight to determine whether ELD rules require a change in pricing or productivity assumptions.
Use Network Intelligence to Protect Utilization
Freight network engineering can calculate profitability by lane and customer. That analysis matters because both the number of miles a driver can cover in a day and the timing of load completion change under strict ELD compliance.
ELDs are intended primarily to enforce hours-of-service rules, but the data can also produce a return on investment. Proper analysis can help a carrier optimize routes, improve utilization, and price freight according to the productive time it consumes.