Prepare for hurricane ELD
Prepare for hurrican ELD
These days billionaires who want to invest in freight services are lined up like hurricanes over the Atlantic. Two of the richest, Bill Gates and Jeff Bezos, jumped in “early” and pumped money into Convoy, the two-year-old Seattle freight broker that’s promising no-haggle pricing and guaranteed capacity. This spring, Uber launched something similar in Uber Freight. Who knows when the next app will blow through?
Of course these disruptive forces in tech are hitting trucking at a time when much of the industry is anchored against winds coming from another direction. I’m talking about ELDs – Electronic Logging Devices.
I saw a recent poll that showed only 33% of fleets currently comply with the ELD mandate, which (as of now) will take effect on December 18 for most carriers operating in the U.S. Roughly 20% say they have a solution in hand and just need to use it.
That means nearly half the carriers out there will technically be out of business before Christmas unless something changes. Hard to believe.
Today’s Trucking has covered the rules and products. But let’s get down to business and look at how ELDs will affect the marketplace.
Simply put, capacity will be in short supply as a large number small carriers and owner-operators decide to park their trucks.
You know what that means. Larger carriers’ newfound pricing power will hurt freight brokers who rely heavily on smaller carriers. Having to tell customers that their delivery schedules have been predicated on carriers breaking the rules is one thing. Trying to get an extra day to deliver for 25% more money is another story. Rates are going up.
Small Carrier Culling
The ELD mandate is going to decimate small carriers and owner-operators that can’t recoup the required capital investment with higher rates. Looks to me like many won’t even bother to try.
Freight brokers and customers will have little choice but to use larger truckload carriers like they have used Less-Than-Truckload carriers for years. That’s a big shift from the way we move freight in Canada.
Just because a trucking company decides not to comply doesn’t mean it’s full of bad people. There are a ton of good Canadian carriers that simply don’t have the balance sheet or cash flow to fund ELD compliance.
A lot of savvy small truckers with a base of direct customers would rather sell or merge into the scale of a larger player. Many will take advantage of the big boys’ appetite for acquisition and exit with some green in their jeans. It’s happening sooner than you think.
Level the Playing Field
The big carriers I’ve talked to are ELD-compliant and ecstatic about the idea that this rule will level the playing field. No one likes losing deals to competitors that deliver faster and cheaper only because they shun the rules.
Safety-conscience carriers are also sick and tired of subsidizing the insurance risks of shady operators. It used to drive me out of my mind when my annual premiums went up because the “industry” had a bad year.
As a father first and foremost, I take comfort in the idea that there will be fewer trucks in the hands of drivers who’ve slept six hours in the last two days. That’s better for our families and the industry that supports them.
I’m also happy for all my pals who sell used trucks because 2018 is going to be a banner year.