How ELD regulations could affect nurseries

How ELD regulations could affect nurseries

New trucking regulations enforcing the use of electronic logging devices could lower profit margins for the entire supply chain.

February 12, 2018

The Federal Electronic Logging Device (ELD) rule mandated by Congress several years ago, and going into full effect this year, is intended to help create a safer work environment for truck drivers. It also is designed to make it easier and faster to accurately track, manage and share a trucker’s record of duty status, known as RODS. An ELD installed in the truck automatically records driving time for a more accurate hours-of-service log. The first phase, begun in early 2016, focused on awareness and transition, and the compliance phase was set to begin in December of 2017.

Editor's note: Enforcement officials won't penalize carriers with out-of-service orders for electronic logging device (ELD) violations until April of 2018, though noncompliance will be met with fines.

While any law aimed at enhancing driver safety is praise-worthy, the new regulation has caused concern among trucking companies, drivers, and numerous industries that rely on haulers to move their goods—including the horticulture industry. It also comes at a time when trucking companies are struggling with a lack of qualified drivers.

Federal regulations governing how long drivers may be actively behind the wheel of their trucks states that truckers cannot work more than 14 hours in a 24-hour period, and cannot drive more than 11 hours in a 24-hour period, without taking a 10-hour break. “Work” means the same as “on duty.” As soon as truckers start a pre-trip, they are on duty, and thus have 14 hours to be “on duty” from that moment on, before they are required to shut down for a 10-hour break. If drivers hit 11 hours of driving, they can still be doing work-related duties, as long as they are not driving. But once drivers hit the 14-hour mark, they must be totally shut down and begin their 10-hour break.

“The biggest problem with these new regulations is the confusion surrounding what industries qualify for the agricultural exemption that was put in place,” says Tal Coley, director of government affairs for AmericanHort. “This exemption allows the ELD requirement to be waived for transportation of agricultural commodities within a 150-mile radius of the farm where they were produced.”

However, guidance provided by the Federal Motor Carrier Safety Administration (FMCSA) on the exemption and who qualifies has been vague and problematic, he adds. Industries that have been included in the past and considered agriculture are now suddenly not included, and it’s unclear if horticulture products will be exempt.

Breaking down the rules

Stephen Martin is logistics account executive for Total Quality Logistics, which operates a fleet of 80,000 carriers, hauling goods and products from Canada to Mexico and everywhere in between. The company has nursery customers based in North Carolina and California, and delivers their products coast to coast, including to Canada.

“Obviously, the single biggest impact of the new regulations involves the HOS, or hours of service, rules and enforcement,” says Martin. “While there is not a large change from the actual rules themselves, the implementation of mandatory ELDs, electronic logging devices, mean that on-duty time is recorded.”

He says the standard operating hours for a driver are three hours of loading/unloading time and 11 hours of drive time with a 30-minute mandatory break included. A driver can be "on duty" for a maximum of 14 hours per day.

Martin believes the impact will be felt by growers of all sizes.

“But I don’t believe the carriers moving flowers, shrubs, trees, etc., should be exempt from the regulations,” he says.

“To put it in perspective of carriers, let's look at carrier sizes,” Martin says. “The first people that will see increase in their pay rates are smaller owner-operators and small fleets. They will be able to instantly command higher prices to haul loads due to the increase in down time. The next people that will see higher rates are mid-size carriers with a large amount of leased drivers that have a few contracted rates with customers, but still rely on the spot market to complete capacity. Their leased drivers, who own their trucks, will leave the safety of a larger company knowing the spot market will pay more.”

He also speculates that the biggest carriers that rely mainly on contracted rates with large companies, i.e. Wal-Mart, Amazon, Tyson Foods, will try to hold contracted rates for as long as possible, but ultimately will have to either break contracts or increase their rates mid-term.

“Long story short, the spot market is poised to see a large increase in rates. It's not yet known how high they will increase, but an increase is inevitable across the board, affecting small and large growers alike. Obviously, larger nurseries with deeper pockets may be able to offset the increase in freight spending by passing the increases on to their customers.”

Click here to read the full article in our January issue, which includes more on potential exemptions for the horticulture industry and impact on the supply chain.

Top illustration: Matthew laznicka