Many factors may push truck pricing higher this year, but new restrictions on truck driver work hours won’t be among them.
Most provisions of the final truck driver hours-of-service rule released by federal regulators on Dec. 22 won’t be enforced until July 2013. What’s more, regulators kept the daily driving limit for truckers at 11 hours despite strong pressure from the Teamsters union and consumer advocates to reduce the allowable time on the road to 10 hours.
“The agency is unable to definitively demonstrate that a 10-hour limit — which it favored in the notice of proposed rule-making — would have higher net benefits than an 11-hour limit,” the Federal Motor Carrier Safety Administration said in its rule, citing “the absence of compelling scientific evidence.”
But the final rule will not close the debate over how long truckers should be allowed to drive and how best to fight driver fatigue and reduce crashes.
Groups on either side of the argument still may challenge the Federal Motor Carrier Safety Administration’s final rule in court. Opponents of the HOS changes in Congress, led by House Transportation and Infrastructure Committee Chairman John Mica, R-Fla., could mount a legislative challenge.
Thanks to the FMCSA, they have more than a year to prepare those challenges and to analyze the effect the final rule would have on supply chains and safety.
Effectively, shippers and truckers got at least a temporary reprieve from restrictions on productivity that many feared would fan the fire under truckload costs and pricing this year. Carriers calculated under an earlier proposed version of the rule they would have to add significant numbers of trucks and drivers simply to haul the same amount of freight and put more of those trucks on the road during morning rush hours.
Some carriers prepared specific estimates based on the earlier proposed HOS rule, including a 10-hour limit. Con-way Truckload determined it would have to increase its fleet by 4 to 5 percent to make up for lost time. Pitt Ohio figured its costs would increase $7.6 million annually. “Since the published rule is different from the earlier proposals and has different elements, we have not yet modeled it against operations to determine the potential impact,” Con-way spokesman Gary Frantz said. “We are in that process.”
Without doubt, truck rates already are rising. Truckload linehaul rates were up 8.6 percent year-over-year in December, according to Cass Information Systems. TransCore Freight Solutions estimates spot market truckload rates were up 7.4 percent on average at the end of the year, and contract rates, 6.5 percent.
Higher equipment and labor costs are expected to keep truckload capacity tight and freight rates climbing in 2012. But analysts say that in the final HOS rule, truckers and shippers avoided at least one of the many bullets being fired at them. The original proposal would have effectively limited drivers to trips under 500 miles a day, which would mean fewer turns per truck, higher per vehicle operating costs and less pay for drivers, making it even more difficult to recruit drivers without offering a bigger pay packet. “The 11-hour to 10-hour change would have had a dramatic impact on the industry,” said Mark Montague, pricing industry analyst for TransCore Freight Solutions.
Now the equation has changed — at least for 2011. “The conditions for the trucking industry will now turn on the fundamentals of supply and demand,” said Larry Gross, senior consultant at FTR Associates.
Trucking companies aren’t exactly happy, however. The American Trucking Associations insists a new rule wasn’t necessary at all. “For the first time in the agency’s history, FMCSA has chosen to eschew a stream of positive safety data and cave in to a vocal anti-truck minority and issue a rule that will have no positive impact on safety,” ATA President and CEO Bill Graves said. “The agency set itself on a course to fix a rule that’s not only not broken, but by all objective accounts is working to improve highway safety.
“If there is a positive in this rule, it is the lengthy period of time before it becomes effective,” Graves said. “This will give ATA time to consider legal options.”
The biggest stumbling point for shippers and carriers is still changes to the 34-hour restart provision drivers use to reset their weekly clocks. The original proposal would have required drivers to take two consecutive midnight-to-6 a.m. off-duty periods before starting their next week. That in effect extended the restart period to as many as 53 hours, depending on when a trucker last went off duty.
The final rule stipulates two consecutive 1 a.m.-to-5 a.m. periods. That means a driver getting off duty at midnight Saturday could restart at 10 a.m. Sunday. A driver who clocks out at 2 a.m. Saturday would have to wait until 5 a.m. Monday — 51 hours — and get on the road just as rush hour begins in metropolitan areas
“We believe the new restart requirement will have a significant impact on the industry, especially those who rely on overnight or early morning deliveries,” said David French, senior vice president for government relations at the National Retail Federation. “Longer overnight breaks create the potential for more big trucks to be mixing with passenger cars during congested daylight hours. This is a case where something that might sound good on paper doesn’t work in the real world.”