Waiting and seeing on HOS changes

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.

By ·

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, 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. Contact Jeff Berman

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!

Article Topics

HOS · Hours of Service · Trucking HOS · All Topics
Latest Whitepaper
B2B Sellers Prefer a Unified Approach for Ecommerce
A new study from Forrester Consulting, commissioned by NetSuite, found that many midmarket, B2B sellers say their ecommerce solutions have contributed to their growth in sales, new customer acquisitions and improved customer relationships.
Download Today!
From the August 2016 Issue
A growing number of low-cost lift trucks offer new avenues for pairing equipment and applications, but less cautious buyers might find that small up-front costs come at a steep price. Selecting the proper lift truck, lift truck tips 2016, Choosing the right Lift Truck
Megatrends in ocean freight
Ocean Cargo Roundtable: What’s in store for 2017?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...

Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....
Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...