Carriers, Shippers Fear HOS Impact on Perishables

Carriers, Shippers Fear HOS Impact on Perishables

Refrigerated trailers at warehouse/distribution center

Shippers and carriers alike are waiting to see how much new hours of service regulations will affect refrigerated trucking and the timing of food deliveries to restaurants, grocery stores and distribution centers.

The new rules apply to all truck drivers, regardless of the type of equipment, but some believe the cold chain might take a bigger hit to productivity than other sectors.

One fear is that some especially perishable shipments could end up being handed off in a Pony Express-type relay service, if a driver’s weekly hours end before delivery is made, raising costs dramatically.

“The number of hours a driver can work in one week has been cut from 82 to 70,” said Jon Samson, executive director of the Agricultural & Food Transporters Conference of the American Trucking Associations. “The largest change is to the 34-hour restart rule. Drivers have to rest for 34 hours before they start a new week, but now that 34 hours has to include two nights between 1 a.m. and 5 a.m. Depending when they started driving and when the 34-hour rest starts, it could be longer than 34 hours — it could be as much as 52 hours.”

That means having a load sit idle for more than two days — a bad idea, especially if the load is a perishable produce item with limited shelf life.

And for drivers who deliver food, taking away two early morning shifts can be a burdensome loss of productivity, according to lobbyist Earl Eisenhart. “It means on any given 1 a.m.-to-5 a.m. shift you have significantly fewer drivers available,” he said. “Unfortunately, that time period is when a lot of businesses, especially food businesses, want their deliveries.”

One debate in Washington has been the effect on productivity. No one seems to agree on an answer, with claims ranging from 1 percent up. “We don’t know how much this will hit us,” said Marc Lundberg, head of refrigerated team service for U.S. Xpress. “Let’s say it’s only 2 percent loss of productivity. That doesn’t sound like a lot, but in a business with such small margins, it is a lot.”

Another change that will cut into productivity is a requirement that drivers take a 30-minute break after working eight hours. “Once again, 30 minutes might not sound like a lot,” Lundberg said. “But by the time a driver pulls off a road, finds a safe place to park and then gets back on the road, you really lose anywhere from an hour to two hours.”

Most drivers are paid by the mile, so limiting the number of miles they can drive each week will translate into an instant pay cut. “Drivers are hard to find,” Lundberg said. “We work hard to keep good drivers. That means that at some point we will have to raise rates so we can pay them more.”

By reducing the number of miles each truck can travel each week, more trucks and more drivers will have to be on the road just to keep the same load capacity moving, he said. “I think everyone agrees this means rates have to go up,” Lundberg said.

Complete coverage of trucking hours of service changes

Rate increases won’t go into effect immediately, according to Richard Burden, director of transportation for fruit shipper Naturipe Farms. “Carriers are still trying to figure out how much the productivity loss will be. I keep hearing it will be between 3 percent and 10 percent, but we lock in rates for the season, so this summer we won’t see truck rates go up.”

Burden said he expects to see some increase for the import season and next growing season. “This year we didn’t get much of a rate increase, maybe 2 to 5 percent. We have very good partners, and we are also good partners. We don’t change trucking companies to get a better deal, and we don’t try to beat them down.”

Lundberg said the new hours of service rules, along with two other regulations, could recast the structure of the U.S. refrigerated truck fleet within the next 12 to 24 months.

“The decrease in pay for drivers, a requirement that all trucks be equipped with electronic onboard recorders, and California regulations requiring new refrigeration units are going to shake out some of the smaller carriers. Some of them — a sizable number of them — won’t be able to stay in business because of the cost of those items,” he said.

 Historically, the percentage of the fleet made up by small trucking companies is higher in the refrigerated sector than in the dry van sector. “We’re going to see a real squeeze on reefer capacity, when the guys operating just a few trucks leave the business,” Lundberg said.

The California Air Resources Board is enforcing the requirements on the transportation refrigeration units. CARB officials have teamed up with California Highway Patrol officers to conduct roadblock checkpoints in the Central Valley and near the Mexican border. Some trucking companies already have been fined for operating units that are too old, but the state agency also is making sure shippers are in compliance with the regulations.

Shippers can be held liable for CARB fines if their loads are hauled in rigs that are not CARB-compliant. The Western Growers Association is advising its members to make sure the bill of lading signed by the shipper requires the carrier to use refrigeration equipment that meets CARB standards.

Lundberg said CARB compliance isn’t the only area where shippers and carriers need to communicate and work together more closely. “We need shippers to help us be efficient,” Lundberg said. “We’ve said this for a few years now, but the hours of service changes make it even more important. We need to make sure we load quickly.”

One thing that could help offset some of the loss of productivity is if the shippers allow truckers to take their mandated breaks at their facility. “If shippers set aside a little area for drivers and welcome them in, then we won’t have to burn some of the driver’s hours on breaks,” Lundberg said. “It can make a big difference in getting a load delivered quickly.”

Another important factor is the need for shippers and truckers to schedule appointments for pickups and deliveries and honor those appointments. “If we can’t get an appointment, or a driver gets there and they can’t take him at the scheduled time, if his hours are about up, we’ll have to take the trailer and drop it somewhere and have another driver pick it up and deliver it. That burns a lot of hours. Or we’d have to burn team hours. Those things could delay a delivery, and leave us with a real mess,” Lundberg said.

Some shippers have implemented penalties when trucking companies don’t meet delivery schedules. “There are shippers that cut $500 from the bill if deliveries are late. We haven’t applied any penalties to our customers,” he said. “We would rather go through it customer by customer and get it straightened out.”

Some carriers, however, have decided to impose penalty payments for missed appointments or long waiting times. “We’ve seen several of our competitors send out blanket letters spelling out those penalties to go into effect July 1 along with hours of service,” Lundberg said.

U.S. Xpress has no plans at present to impose service penalties, he said. “We’ll be watching trends. It could potentially become one of those situations.”  

Contact Stephanie Nall at stephnalljoc@joc.com.