Subscribe to our free, weekly email newsletter!



Waiting and seeing on HOS changes

By Jeff Berman, Group News Editor
July 22, 2013

It has only been barely three weeks since the Federal Motor Carrier Safety Administration’s (FMCSA) new motor carrier Hours-of-Service (HOS) rules took effect.

Before the July 1 effective date, there was (and still remains really) much speculation and conjecture surrounding exactly what the impact of the new rules is or will eventually turn out to be.

Many contend that the new rules will have an incredibly negative impact on supply chain and logistics operations, citing how reducing the number of hours being reduced, as per the new law, will hinder productivity, on-time performance, and overall service. That line of thinking seems simple enough to follow.

And those in favor of the new regulations stress a more significant onus on safety, which essentially is the core principle driving this change in the first place. Who is not in favor of safety, right? That is where the Feds are coming from, even if parties like the American Trucking Associations, for example, have tons of data indicating that fewer hours on the road equates to safer trucks.

I am not taking sides here; instead, I am taking a big picture approach more than anything.

Let’s take a quick look at exactly what the new rules consist of, in case anyone needs a quick refresher:
-the maximum number of hours a truck driver can work within a week has been reduced by 12 hours from 82 to 70;
-truck drivers cannot drive after working eight hours without first taking a break of at least 30 minutes, and drivers can take the 30-minute break whenever they need rest during the eight-hour window;
-the final rule retains the current 11-hour daily driving limit (the FMCSA was considering lowering it to 10 hours) and will continue to conduct data analysis and research to further examine any risks associated with the 11 hours of driving time;
-truckers who maximize their weekly work hours to take at least two nights’ rest when their 24-hour body clock demands sleep the most—from 1:00 a.m. to 5:00 a.m. This rest requirement is part of the rule’s “34-hour restart” provision that allows drivers to restart the clock on their work week by taking at least 34 consecutive hours off-duty. The final rule allows drivers to use the restart provision only once during a seven-day period; and
- carriers that allow drivers to exceed the 11-hour driving limit by 3 or more hours could be fined $11,000 per offense, and drivers could face civil penalties of up to $2,750 for each offense

In most transportation circles, the 34-hour restart and the reduction in total driving hours per week from 82 to 70 appear to carry the most weight, which could translate into tighter capacity availability and higher rates, among others. 

But, again, it still seems like it is too early to tell, or is it?

A research note from Cowen and Company analyst Jason Seidl referred to industry channel checks indicating that “some private carrier fleets have roughly a 10% utilization degradation…partly due to the fact that drivers must now take 30-minute lunch breaks as opposed to having previously been able to take their lunch while at a delivery or pick-up location.”

Seidl added that while his firm believes that this degradation should get better over time as carriers and shippers work together to make deliveries more efficient, but cautioned there should be some near-term cost impacts as many carriers are looking to assess the impact before attempting to put through broad or selective rate increases. 

A recent survey by Transport Capital Partners found that nearly 40 percent of its carrier respondents expected lower utilization by less than 5 percent, with more than 35 percent expecting lower utilization of less than 5-to-10 percent. More than 50 percent said they planned to rework routing and load assignments in response to the new rules, with more than 10 percent planning to raise driver pay to compensate for fewer miles, and nearly 80 percent are going to seek shipper cooperation on scheduling and/or increase detention charges. Not surprisingly, more than 50 percent of carriers said they intend to seek shipper rate increases on impacted lanes.

So, how do shippers feel about all of this?

A retail shipper whom declined to be identified explained to LM that things are going as well as can be expected, given the short period the rules have been in effect.

“A few weeks in now, things are going well so far,” the shipper said. “This communication around what was coming was pretty well documented from an industry standpoint. We were able to effectively plan for the impact with both our Dedicated and NonDedicated carriers to ensure risk mitigation. We used feedback from our carrier partners on current operations to adjust pickup and delivery times where necessary so that the transition would be seamless to our operation.”

But the real test, relative to market capacity impact, explained, the shipper, will be in any economic uptick later this year. That’s where the shipper said he is expecting to see the over-the-road market do some “interesting things” with capacity tightening and having a potential pricing volatility swing for unprepared shippers, with increased seasonal volume.

Of course, whether there is an actual economic uptick later in the year remains a big “if,” but either way what happens with HOS—good or bad—will remain interesting to follow nonetheless.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Following the lead of its Congressional Colleagues in the House of Representatives, the United States Senate yesterday approved a measure geared to keep federal surface transportation funding intact through the end of December with a nearly $11 billion stopgap fix.

XPO Logistics announced second quarter earnings and the acquisition of two companies, New Breed Logistics, a non asset-based 3PL focusing in contract logistics services, for roughly $615 million, and Atlantic Central Logistics, a 3PL provider of last-mile logistics services, for roughly $36.5 million.

The report, entitled “Outlook for the Domestic Transport and Logistics Market in 2H14 and Beyond,” takes the view that strong freight levels in the second quarter have left trucking companies in a good position: one in which they need to come up with new plans to handle rising demand. But even with that positive momentum afloat, the report observes that there are some familiar challenges intact, such as a lack of qualified drivers and the regulatory drag from the new hours-of-service rules that took effect in July 2013.

Flags of Convenience are a fact of life in the commercial maritime trade, but several European political action groups are worried that they will pose a threat to the Continent’s air cargo industry.

For May, which is the most recent month for which data is available, the SCI is -7.5, following April’s -7.5. FTR said this reading represents a still-tight capacity environment, as utilization rates hover between 98 percent and 99 percent.

Article Topics

Blogs · Trucking HOS · HOS · Hours of Service · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA