Logistics Management

The ways that people fight with change....
December 26, 2007

Let's look at a very public change that happened in the past 5 years that affected everyone in logistics. Many man years of study that led up to the change. There was a very good public reason for the change. The change was both supported and pilloried from both expected and unexpected directions. And 4 years after the change went into effect there are still court battles where the forces against the change with in court, but loose as the change marches forwards.

The change: Hours of Service Rules.

I am not going to give you a history of how the FMCSA studied the change, how some of the opponents were the original instigators, or the seesaw battle being fought in the courts. Nor am I going to dive deep into the “controversial” sleeper-berth rule changes that happened later. Feel free to do your own history lesson, or live in your opinion based on whatever facts or fiction you wish to believe.

What I want to look at is what drove different factors of folks to react to the rules, first as they were proposed, as they were implemented, and now that the rules have been in effect. Let’s look at the acceptance, or lack of acceptance.

And I expect some homework from some of you. I am going to make some “false” statements to see if anyone is paying attention or has the stones to call out where I have made a “mistake”. (Remember, this is supposed to be a place where the readers can participate.)

I remember in the summer of 2003 when one of our carrier partners brought up the proposed changes to the HOS rules. Our partner did know what the rule changes were going to be, but his company was concerned because the rule changes would bring changes to how they operated their company. There was some doubt in Bill’s voice about the value of the changes, and the notion that the rules were going to improve safety in his already very safe trucking company. But at the end of the conversation it was not the HOS rule changes that concerned the carrier, but the fact that the carrier would need to make changes, and how well they were going to manage those changes and not affect their customers.

I think it was about 45 minutes later that I was reading the actual proposed rules from the FMCSA web site. What became official was in the document that I read that last summer day. I had some concerns on the impact on our dedicated operations, but knew that to really know the impact would require some thought and experience.

In the thought phase we turned to a tool that we used to develop our delivery schedules. In the test environment we changed the HOS rules, ran the current schedules, and looked at the results. Yep, there were some routes that would not get “back to the barn” before the working hours ran out. But there were also some routes that benefitted the extra driving hour. About 2 hours later with some minor changes for that fleet we had the schedule down, and the costs were…. Unchanged.

We picked a second fleet and did the same thing. This fleet was not as well optimized and the end result was a minor savings. That is right, savings.

So, using an empirical modeling tool we ran the new rules against two of the five fleets and saw that there would be changes in the execution, but no changes in the end result, cost. OK, so that tested the “theoretical” effects, but what about the practical effects?

So I started to loop the impending changes into my conversations with the carriers, asking them what they knew, what they thought the impact would be, and what they were doing to be prepared for the changes. In speaking to our carriers (some partners, some just providers) there was a wide spectrum of reaction, with most of the weight on the “negative” side of the balance. One consistent that I picked up in the conversations with the executives and sales reps was; the more informed the carrier was, the more that the carrier had thought about the changes, and the more the carrier had actually looked at the changes and “modeled” the changes, the more positive the outlook of the carrier.

DUF was in force. There was DUF in every conversation. 

All voiced doubts of how things would work. There are just too many variables creating doubts. Doubts if the changes would really reduce accidents. Doubts that drivers would make a living wage. Doubts if shippers would really understand the impacts. There were doubts everywhere.

Many were uncertain of what would happen, how the drivers would react, the shippers react, how enforcement would work. Many were uncertain how their systems could make the change; so much of the trucking industry software had the HOS rules “hard coded” into it. One carrier spoke about setting up some of their drivers on the new rules and “testing” to see what the effect would be, gaining a practical knowledge similar to what we had done with our optimization models. But that was rare, most just had a list of things that they were uncertain about.

The longer the list of uncertain things the more fear that crept into the conversation. “We will loose drivers,” was one line that I heard more than once or twice. I also heard that “rates will have to go up,” from some of the less informed. The worst conversation was with a carrier who I think did not have a clue of what the changes really were, comments led me to believe that this was the first that the carrier rep was hearing about the changes.

In October 2003 I attended a Transportation Summit at Georgia Tech on the HOS rule changes. Someone from the DOT presented the technical breakdown of the changes. There was also a panel discussion with the senior marketing / sales officers from each of the “major” truckload carriers, and one LTL carrier. In retrospect, of the whole day, it was this hour that was the most interesting. Each carrier got to talk about how wonderful they were, with the caned PowerPoint presentation about how big and powerful they were. It was what the carrier salesman said after the PowerPoint that proved to be interesting.

The LTL guy was the least worried; his company had looked at the operations with the new rules in mind and determined that it was a “non-event” to their company. They did not see costs rising due to HOS.

The truckload guys? Oh, they came out swinging the cost increase / rate increase bat. Thos shippers that don’t run efficient docks and get the truck loaded and turned around upon arrival, they will be charged. Multi-stop pickup or drop off routes, the stop charges will go up. All jumped on the split berth rules, talking about how a level of driver flexibility is now gone. And the drivers need breaks, which will not stop the on duty clock, so the line haul costs will go up, passed along to the shippers.

Funny thing, when I asked the panel in the Q&A about the carrier compensating shippers or consignees for being late for pre-arranged pickup or drop off appointments, or if detention past “free time” would be waved if the load was late for the appointment, there was not a solid answer from the panel. Someone muttered a “we will have to think about that” as a form of an answer.

I walked out of the GT Summit thinking that it would take years to really understand the impact of the change in the HOS rules would bring about. I knew that there were things that my company could do to make it a non-event for our operations. I also knew that there would be some additional costs that would come our way if we chose not to take any action with shippers that we were picking up collect from. I knew that the impact of the HOS rules changes would be just another thing to manage, the issue of the year, and the headache would pass as our team became used to the change, and is passed to being another fold in the texture of our jobs.

So, four years later and HOS is still a headline in the trucking trade press. The same Joan Claybrook of Public Citizen is still throwing lawsuits at the HOS rules. James Hoffa at the Teamsters is still negative on the rule. Oh, and the truck fatality rate of deaths per million miles also fell to a new historic low, for all trucks and for large trucks.

What has been the impact at your company? Did the bad news come true?  Or did other "events" have a greater impact.  The real question to ask yourself is "Did the DUF that you saw going in come true?"

Posted by on December 26, 2007 | Comments (0)