In the coming weeks there are many new regulations coming that could hit the trucking industry pretty hard.  While one regulation may not be enough to make a big deal, combined they could potentially make it difficult to find trucks.

1. ELD Switchover

We are one week away from the required switchover from AOBRA to ELD. While this isn’t news to any truckers as they have known about the coming regulations for the past year, thousands have not made the switch.

Last year the Federal Motor Carrier Safety Administration or FMCSA announced the electronic logging device (ELD) manage to improve safety in the industry.  This is a device that is able to record the driving time automatically on a vehicle’s engine.  This not only provides a greater level of safety for drivers and other drivers on the road, but it also simplifies the process of logging time and is more accurate than the traditional paper log method.

This new mandate, according to the FMCSA, is to provide more compliance with hours of service regulations.  The mandate helps regulate the hours a driver is on the road to prevent tiredness that could cause potential unsafe situations for other drivers.  Not only does the ELD record their driving hours, it is also able to monitor other things such as location, miles, and movement.

2. Spike in diesel prices?

IMO 2020 could cause us to see a rise a 25 cents per gallon rise in diesel prices.  January 1 ocean vessels are required to use ultra-low sulfur fuels.  As fuel being the biggest expense for carriers, this rise could put some carriers out of business.  A report by Jason Miller and FreightWaves, “The biggest surprise to most outside of trucking industry professionals would be that failures are not primarily caused by spot and contract rates falling steeply in a recession. Instead, failures are primarily due to huge spikes in diesel prices that smaller carriers cannot pass on.”

3. January 6 – Drug and Alcohol Clearinghouse

All trucking companies will soon be weeding out drivers.  January 6^th companies are required to use FMCSA’s Drug and Alcohol Clearinghouse.  This is a database that will allow employers to get information on CDL drug and alcohol violations.  Right now, drivers who have been fired from drug use and go to another state and obtain a job.  This database will help employers identify if their drivers has prior violations.

Currently the FMCSA uses urine testing to detect drug use.  However, it can only determine if there has been any drug use in the past few days.  If they permit the use of hair follicle testing, they can detect drug use for up to 2-3 months.

4. New Overtime Laws

2020 will also bring new overtime laws into effect.  This will make 1.3 million Americans eligible for overtime pay.  For the most part this will affect carriers and companies with back-office staff.

Last year the Federal Motor Carrier Safety Administration or FMCSA announced the electronic logging device (ELD) manage to improve safety in the industry.  This is a device that is able to record the driving time automatically on a vehicles engine.  This not only provides a greater level of safety for drivers and other drivers on the road, but it also simplifies the process of logging time and is more accurate than the traditional paper log method.

This new mandate, according to the FMCSA, is to provide more compliance with hours of service regulations.  The mandate helps regulate the hours a driver is on the road to prevent tiredness that could cause potential unsafe situations for other drivers.  Not only does the ELD record their driving hours, it is also able to monitor other things such as location, miles, and movement.

On October 25^th the Small Business in Transportation Coalition created a petition asking the White House to get rid of ELD regulations.  This petition is in response to new data that shows an increase in fatal trucker crashes. So far this year there has been 885 deaths, an increase of .8%.

The petition:

On October 22, 2019, the National Highway Traffic Safety Administration (NHTSA) of the United States Department of Transportation (USDOT) released new data that show that in 2018, the first full year the new ELD rule was in effect for the trucking industry to enforce commercial motor vehicle operators’ compliance with hours of service regulations, more than 2 occupants of large trucks died. Every. Single. Day. This is the highest number of such deaths since 1988, making this stat a 30-year high. We believe ELDs have caused drivers anxiety to such levels that many now recklessly speed to beat the clock. We call on the Whitehouse to direct the USDOT to act on NHTSA findings and immediately suspend ELDs until unintended consequences can be studied to decide if the rule is ripe for repeal.

Currently, the petition only has 9,815 signatures, and needs another 90.185 to get a response from the White House before November 24^th.

Since the start of the Iraq war in 2003 until its end in 2011, it tallied up over $1 trillion to the U.S. debt and cost over $1.06 trillion. The Iraq war was the U.S. response to the 9/11 terrorist attacks by al-Qaida and part of the War on Terror. This war also added $1 trillion to the U.S., which increased the base budgets for the Department of Defense (DoD) and the Veterans Administration.

The DoD saw a expanded the by $193 billion, and the VS by $47.7 billion. In addition to the debt amount, $819.7 billion in Overseas Contingency Operations was dedicated just to the Iraq War.

The following are costs taken from the 2014 Congressional Budget Services Report:

FY 2003- $90.3 billion
FY 2004- $90.0 billion
FY 2005 – $105.8 billion
FY 2006 – $108.3 billion
FY 2007 – $155.9 billion
FY 2008 – $196.8 billion
FY 2009 – $132.9 billion
FY 2010 – $83.4 billion
FY 2011 – $50.9 billion
2012-2014 – $7.8 billion
2015–2016 – $38.7 billion

Economic Impact

While many Americans did not feel the cost of this war, future generations will continue to pay to the debt. One researcher, Ryan Edwards, “estimated that the United States incurred an extra $453 billion in interest on the debt to pay for the wars in the Middle East. Over the next 40 years, these costs will add $7.9 trillion to the debt.”

Between 2010 and 2011 we experienced a 24 percent jump in gas prices due to lower oil production. These climbing oil prices were reflecting the price of war. Oil prices are one thing that Americans continue to pay for. Following the recent drone attack on a processing facility and oil field in Saudi Arabia, oil prices rose 20%! One industry taking a big hit from this is transportation. This attack caused a 5% cut on of the global supply sending Brent crude rising to the most it has been since trading opened in 1988.

The future of the transportation industry

In fact 2019 has been the worst year for the trucking industry. During 2017 and 2018 the industry was booming and many companies were able to expand their operations. Thus far in 2019, over 600 trucking companies have failed.

For the most part, getting into the trucking industry is quite easy. All you need is a CDL, a truck, and a company to work for. Most of the time, drivers venture off after a few years to start their own small trucking companies. In fact, smaller fleets are trending upward while larger fleets for 100+ trucks are decreasing.

Venturing out into their own companies is very easy for some drivers due to the relationships they have made with shippers. Small carriers also often have lower overhead costs and have the ability to drop their rates under larger carriers making them more appealing to shippers. There is a deflationary effect this is having an impact on spot and contract rates with the rise of small carriers.

The last freight recession was in 2016, a good majority of the contacted rates were based on 2016 activity. Meaning this kept profit margins low from 2017 and early 2018 because rates are on an annual cycle. In early 2018 many carriers began to violate their contracted obligations to take on higher paying spot market freight. Spot rates began to grow way above contract with the high demand. During this time, carriers were getting over double their contracted rates and the spread was ignored.

What is the future of the trucking industry in 2020? Many analysts believe that the oil demand will peak in 2020 at 100 million barrels per day. For the foreseeable future, the demand for freight transportation will continue to rise. They American Trucking Association (ATA) predicts the industry will grow nearly 30% over the next 11 years.