US fleets fear HoS reduction, driver shortage

by Canadian Shipper

DALLAS, Texas — There are several issues weighing heavily on the minds of US fleet executives who were speaking at the Commercial Vehicle Outlook Conference this week in Dallas, and they may not be what you’d expect.

Trucking industry leaders at the event seemed satisfied that freight volumes, and even trucking rates, were rebounding. What really concerned them was a growing sense that US hours-of-service will soon be reduced and that a driver shortage of unprecedented proportions will soon arrive.

US hours-of-service rules have been under review since late last year, when a coalition of special interest groups convinced the Federal Motor Carrier Safety Administration they were unsafe, even though highway safety has improved under the existing rules.

Fleet managers in attendance seemed resigned to the fact that allowable daily driving hours will be reduced by one or two hours as early as this fall and the 34-hour restart provision could even be stretched to 48 hours if lobbyists have their way.

“The hours-of-service rewrite is a political football and it will have nothing to do with good science,” said ATA chairman Tommy Hodges. “It’s a political football that is going to get passed over our heads. There’s a good possibility we will lose one to two hours of driving time and there’s a strong possibility we’ll lose the 34-hour restart.”

Losing two hours of driving time per day would effectively reduce truck productivity by 18-19%, Hodges pointed out.

Truckers cannot afford a productivity loss, especially when it’s likely to coincide with a massive shortage of drivers. Consider that capacity is already tight and that CSA 2010 could make as many as 200,000 current drivers unemployable and you have a perfect storm brewing – a capacity crunch so severe that it could mean freight sits undelivered on shippers’ docks.

“CSA 2010 is going to be a catastrophic event,” said Leo Suggs, chairman and CEO of Greatwide Logistics Services, which has an ambitious plan to hire 800-1,000 owner/operators by the end of the year. “If you couple the reduction in hours-of-service to the driver shortage today and then to CSA, then I think we have a crisis situation shaping up from a capacity standpoint. I think the magnitude of that will depend on how quickly the federal government recognizes we have a problem and figures out some way to delay or mitigate the impact (of the regulatory changes).”

Other fleet executives speaking on the same panel were less apocalyptic about CSA 2010, however they agreed a driver shortage combined with a loss of productivity should hours-of-service be revised could be a devastating one-two punch.

“The availability of drivers is going to be extremely tough and we’re going to hear about freight that doesn’t move,” said Max Fuller, co-chairman of US Xpress. He predicted a shortage of drivers in the hundreds of thousands and says “freight will be left on the dock and it’s going to be a big game-changer for the shipper.”

It will also be a game-changer for carriers, the panelists agreed, and will require trucking company managers to change their traditional ways of thinking.

“This industry historically thinks in terms of miles,” said Tom Kretsinger, president and CEO of American Central Transport. “I think one of the key measures will have to be time. What percentage of this limited time can we put to good revenue use for us and the driver.”

Kretsinger said when his fleet deployed electronic on-board recorders, it was surprised to learn just how much of its drivers’ on-duty hours were not spent productively. Trucking companies will have to better manage their drivers’ on-duty time and that may mean fines for shippers who hold up drivers and equipment.

“As shippers compete for scarce trucks, I think this will add a new dimension to rates,” Kretsinger said.

US Xpress’s Fuller agreed.

“In the past, we used to think about miles and productivity based on miles,” he said. “We’re going to have to really think about time – the driver’s time and the utilization of that equipment – and factor in a cost to a customer that is tying that truck up.”

Greatwide’s Suggs agreed fleets will have to strive towards better equipment utilization and that could mean a heavier reliance on intermodal or finding creative ways to eliminate empty miles.

“We won’t be able to afford to have the truck sitting in the rest area with the driver in the sleeper for 10-12 hours,” he said.

A reduction in legal working hours for truckers will also impact the average length of haul, Kretsinger noted.

“Between CSA 2010 and EOBRs and probably hours-of-service changes, the definition of a one-day haul is going to change,” he said. American Central Transport’s average length of haul is 600 miles and all its pricing and driver pay rates are based on the assumption that delivery can be completed in one day.

“I think people really need to keep an eye on that and work with it as this thing progresses,” he warned.

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