The new hours-of-service (HOS) rules for truck drivers that went into effect a year ago this month have strained some processes and relationships and certainly have put upward pressure on transportation costs. But the rules also have been a catalyst for operational improvements and, overall, shippers, carriers and drivers appear to have adjusted well to their first revision in more than 50 years.
That adjustment may be sorely tested, however, as the final chapter in this story plays out. Later this year, the Federal Motor Carrier Safety Administration (FMCSA) must respond to a court-ordered remand that vacated the new rules just six months after their implementation, and all parties remain extremely wary about what additions or recissions will be forthcoming.
After the July 2004 court ruling, Congress stepped in to keep the new HOS regulations in effect through Sept. 30 of this year. By that date, FMCSA must address concerns raised in the decision from the U.S. Court of Appeals for the District of Columbia in a challenge brought by Public Citizen, a consumer advocacy group. While the court struck down the rules on the basis of only one issue-the FMCSA's failure to take into account the effect of the change on drivers' health-it was bluntly critical of nearly every aspect of the HOS rulemaking.
FMCSA cannot comment on its deliberations, but spokesman Dave Longo confirms the obvious: that the agency "is reviewing the current rule with a view toward revising various aspects according to the court's recommendations." In a separate rulemaking, FMCSA also is considering whether to require the use of electronic onboard recorders to track driving time, an issue that originally was proposed as part of HOS changes, but was dropped from the final rules due to cost concerns and lack of equipment standards.
Within industry, there is no enthusiasm for another round of HOS changes-not surprising given the time and work that went into complying with the latest revision. Schneider National of Green Bay, Wis., the nation's largest truckload carrier, says that it spent $5.7m to convert to the current HOS rules. The real worry, though, is that satisfying the court's objections could mean another productivity hit.
Public Citizen, the plaintiff in the court case, advocated a nine-hour driving limitation and a 12-hour break between duty shifts. "You can do the math in terms of productivity if that happened," says Scott Arves, president of transportation at Schneider. "That would make driving jobs even less attractive and make good drivers even harder to find. If a driver only sleeps for seven or eight hours and he is away from home, what is he going to do for the remainder of a 12-hour break? Drivers are not going to want to sit in a truckstop for four hours."
Carriers are not embracing the idea of electronic onboard recorders either, though this requirement would likely not generate much of a fight if it helped prevent further erosion of working hours. "We would be supportive of trip recording technology to monitor driver compliance if it were applied universally across all carriers," says Arves.
Still unanswered is whether the new rules have reduced truck accidents-their intended goal. Enforcement efforts did not begin until last spring and "it is just too early to know" the safety impact, Longo says. He adds, however, "anecdotal information is very positive."
Essentially the new hours were designed to reduce fatigue by putting drivers on a more natural 24-hour work/sleep cycle. A 14-hour on-duty period (formerly 15 hours) must be followed by 10 hours of rest (formerly 8 hours). A 14-hour duty shift may include up to 11 hours of driving time (formerly 10 hours). One major change is that once the clock starts on a duty shift, it cannot be stopped, except by a substantial rest period in a sleeper berth. This means that breaks and wait times at a dock can no longer be logged as "off duty." Another major change is the 34-hour "restart" rule, which resets a driver's hours to zero after 34 hours of continuous off-duty time.
When these rules were first announced, truckload carriers, in particular, warned of significant productivity losses and accompanying cost increases for shippers and receivers that kept drivers waiting or that required extra time to load and unload. Instead of the 5 percent to 7 percent productivity loss originally predicted, however, Schneider estimates that the impact on productivity actually has been in the 2 percent to 4 percent range. "But that would have been much higher without mitigation efforts on the part of Schneider and its customers," says Arves. He says Schneider is "very pleased" that its average wait time is down 40 percent over last year.
Tom Sanderson, president of Transplace, a 3PL based in Plano, Texas, reports a similar experience. "I do not think that there has been nearly as much of a decline in truckload carrier utilization as was anticipated," he says. "That's because shippers have gotten much more focused on reducing the idle time that drives speed at the loading and receiving docks." This has not been done out of the goodness of their hearts, he adds. "There has been a pretty strong economic incentive to take those actions in the form of detention charge increases." It used to be that almost every carrier would allow two hours free time for processing a load, he notes. "Now many carriers allow only one hour."
There is no question that the HOS changes came at a good time for carriers-in the midst of a capacity crunch that dramatically shifted market forces in their favor, giving them the pricing power required to enforce increased detention and accessorial charges. According to a recent study by Boston-based Aberdeen Group, "New Strategies for Transportation Management," detention rates for delays are up as much as 100 percent and stop-off charges have increased from $40 to as much as $400. Moreover, carriers have become much more aggressive about allocating limited capacity to customers that are "driver friendly."
This turn of events was a wake-up call for many shippers, who had become accustomed to a trucking environment where supply exceeded demand. "For the past four or five years, companies have been able without too much problem to reduce their freight costs year over year," says Beth Enslow, vice president of enterprise research at Aberdeen. "But that has all changed." Hours of service are not the only reason, but when coupled with fuel surcharges and general rate increases (some of which reflect increasing driver pay), many shippers found last year's freight costs to be 15 percent to 25 percent over budget. "Even more significant than cost is the service impact," says Enslow. "If a company is not able to get enough capacity at the end of the month or during a holiday week to serve its customers, that really gets executive level attention.
"The key message out there today is that if you want to find capacity and manage down rate increases, then you need to do a number of things to make it easier for carriers to do business with you," she says. That includes preparing freight so that it is easy to load and unload, using more drop trailers instead of live loading and giving carriers visibility to upcoming capacity needs, she says. Aberdeen estimates that only about 15 percent of shippers have adopted these recommended operational changes, but the message seems to be getting through.
|"I've been out visiting carriers at their locations, talking to their upper management and selling our company to them."
- Wayne Johnson of American Gypsum
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