Regulatory Review: How the New Hours-of-Service Rule Affects Shippers
The Federal Motor Carrier Safety Administration regulates the United States trucking industry within the Department of Transportation. In efforts to prevent commercial motor vehicle-related fatalities and injuries, the FMCSA has published highly controversial changes to the regulations involving truck drivers’ allowable driving time, called “Hours-of-Service”, or HOS. The changes were released in December of 2011, however the industry is bracing itself now because we are nearing the final compliance date of July 1, 2013. Any vehicle that is used as part of a business and is involved in interstate commerce can be subject to the changes with some qualifying descriptions found on the FMCSA website.
Aimed at addressing issues such as driver fatigue, the regulations are hotly contested by the majority of trucking companies nationwide. Most drivers feel the rules will interfere with their productivity, and therefore, profitability, and have a negative impact on industry safety. Shippers are bracing for the hours-of-service compliance date and the chain reaction of ripple effect it will have on their entire supply chain going forward. This critical aspect of the logistics industry is something that not only affects domestic freight professionals, as it also extends to international shipping. The first step of precaution we advise our shippers to take is to be knowledgeable and understand how the HOS regulation can and will impact your transportation processes.
The most critical element of the regulation is the provision limiting the minimum on 34-hour restarts. In the final ruling, drivers must include periods in those two nights between 1-5a.m. as home terminal time, and this may only be used once per week. They drive their daily 11 hours, but are capped weekly at 60/70 hours before they need to take the 34 hours of down time to restart their weekly clock. An additional factor involves the mandatory rest breaks of at least 30 minutes every 8 hours. There are numerous ways the final ruling impacts the shipping world, here are a few major ones:
Delayed deliveries: Due to the reduction in the amount of time a driver is able to operate, it will inevitably take longer to transport shipments, resulting in delivery delays to your customers and potentially even a loss of business. For just-in-time manufacturers that have operated with lean inventories and small delivery windows, it can affect the inbound timing of those very important deliveries that supply production lines.
Increased costs: In order to continue supporting their customer base, trucking companies will be forced to pay current drivers more, add additional drivers, and add trucks to offset the decrease in available hours per driver. Some carriers estimate the impact on their revenues could be up to a 33% hit. The additional operating costs associated, estimated between $10-25,000 per truck, will undoubtedly be passed along to the shippers.
Reduced availability: Many trucking companies will be unable to keep up with the need for increased equipment, and will be unable to expand their fleets to service their existing customer base. Recent changes to trucking compliance regulations already put a dent in the available pool of decent truck drivers with a safe record, and the best drivers are going to the companies with the best pay and benefits package. Fewer available trucks will lead many carriers to unethical business practices such as juggling shipments beyond acceptable pickup date ranges and making empty promises to their customers. Shippers will need to have increased accessibility to additional partners with proven strong service records.
Reconfigured Routing: Shippers may need to adjust and rework their usual shipping schedules and loading process to accommodate the changes in the hours-of-service within acceptable delivery appointment windows. Warehouses often have stringent acceptable time frames for inbound orders, which can affect the ability of the driver to offload the order and move on to their next load. To avoid increased days of transit and costs, shippers will often need to reconfigure the way they route many routine shipments or work with their customers on looser delivery windows.
Trinity Logistics is poised and prepared to help counteract the effects of the HOS ruling on your supply chain. Working on your behalf, as a service to all our customers, our carrier relations department has a strict process in place to manage our pool of nearly 30,000 providers to ensure that your shipments are handled by providers who are compliant and will treat your shipment with care. From load planning to execution, our team has over 35 years of experience in keeping your freight costs manageable and your customer service ratings impressively high despite regulatory challenges.