Impact of ELDs on Rates
The ELD mandate, that goes into effect in December of this year, was intended to reduce the number of accidents involving a commercial vehicle.
However, preventing accidents isn’t the only effect that the regulation will have on the 3.5 million trucks that will affected by the mandate.
Rates will go higher due to complying with the mandate, and as a result, the majority of trucks have yet to buy or install ELDs. These devices and their ongoing service will cost transportation businesses, and to offset that, they will in turn increase rates.
If you or someone you know is going to be affected by the ELD mandate, use our help below to navigating the impact on rates and when you might see these changes go into effect.
Higher Rates are Coming
You can’t drive as many miles when you’re recording with an ELD, since there are such strict regulations on how many hours are allowed per day. This is true regardless of any special events that may occur out of the norm, such as strict appointment times or the time spent being detained on the road.
Meaning, rates per mile will have to go higher, given that ELDs are not flexible. There will be no wiggle room for truckers, and they will have to start charging for it for proper time management. Special circumstances will cost more, and it’ll even be more likely to see brokers paying more to secure trucks for their obligations.
Overall, it makes sense for ELDs to increase rates, right?
...Not So Fast
While it is likely that ELDs will impact rates in the future, there is not much of a change right now in the transportation industry. ELDs currently have no effect, with no volatility in the market right now.
In fact, transportation analysts believe that it will actually take much longer to see these higher rates. Reasons why this won’t be immediate include:
Smaller carriers who were running illegally prior to the ELD mandate may have no incentive to comply, given that they would probably run out of business. This will surely lead to enforcement problems that could take time to solve and figure out.
It is also very possible an economic recoil will occur as freight movement slows and rates increase. This could lead the federal government to delay implementation, similar to when the railroad’s mandate was delayed by 3 years.
ELD Production Constraints
Last but not least, the ELD production itself may impact rates and cause delays. If businesses wait until the last second to place their ELD orders, it might lead to backlogging for delivery. Therefore, an enforcement delay would be necessary until there is enough product to meet demand.
The ELD mandate is meant to save lives and standardize the trucking industry. However, if you find yourself facing problems due to the regulations that are going to be enforced, then contact us at UTECH.
Our goal is to help everyone in the transportation industry, no matter the size of your business. We strive to develop solutions and tools to help improve the operational and financial performance of our customers. Whether you have concerns about the future, or don’t know which ELD software to turn to, let us answer all your questions today