Hours of Service Backlash

Nov 26, 2013

While discussion of fuel consumption has always been a topic of concern, the most prevalent issue that is currently swirling through the transportation industry is the FMCSA's recent adjustment to the hours-of-service regulation. Safety administrators are praising the policy change for its structured increase of off-duty time requirements. However, Fleet managers, drivers, and business owners alike are up in arms about the massive reduction of available working hours. In our last article on the topic, which summarized the full policy, we calculated that each individual driver is having 624 hours cut annually due to the change. To put that into greater perspective, if driving at an average pace of 60 MPH for 624 hours, 37440 miles will be traversed; equivalent to starting in Seattle, WA and circling the contiguous United States 4 times. If this reduction was spread across a fleet of drivers, the business would feel the repercussions. However, this is for each of the nearly 6 million Commercial Motor Vehicle drivers in the United States, so "it's only a matter of time before these impacts ripple throughout the nation's economy." (K. Burch)

The American Transportation Research Institute (ATRI) recently released a 60-pg, thorough analysis of the "Operational and Economic Impacts of the New Hours-of-Service". Utilizing results from a 2300 driver survey and 40,000 commercial driver logbooks, the research established a few noteworthy operational and economic impacts from the HOS update.

~  Greater than 80% of motor carriers are in the midst of a quantifiable productivity loss since July.

~  Nearly half of the businesses surveyed have had to employ more drivers to deliver the same amount of inventory.

~  Even though the updated HOS policy reduced a driver's weekly hours from 82 to 70, 66% of the drivers are experienced greater levels of fatigue while just over 82% of commercial drivers have had their quality of life negatively affected.

~  Unchanged deadlines have required drivers to operate at more time periods of greater traffic a financial risk to fleets that we discussed last week.

~  Annualized loss of wages is around $2 billion due to the drop in hours

The research also provided the key outcomes related to productivity which are as follows:

~  More Drivers are now Required to Move the Same Amount of Freight: To comply with the HOS rules carriers have shifted driver schedules. Many of these new schedules have resulted in a decrease in the number of weekly miles a driver can log. Due to the decrease in miles, carriers have a choice of turning down freight or making up the miles by incorporating additional drivers and/or equipment into their operations. These options are less efficient than operations prior to the new HOS rules, and are a central component of the productivity loss.

~  Driver Shortage and Turnover: Prior to the July 1st HOS rules, qualified drivers were scarce with an estimated shortage of 20,000 to 25,000 for-hire truckload drivers.7 As a result of the changes more drivers are required and the level of scarcity has increased. To attract drivers after the HOS change, some carriers have opted to increase pay8 and some may increase rates for shippers. Rate hikes are challenging, however, due to strong competition among industry participants. If rate increases do not fully compensate for driver pay increases then carriers raising pay will assume an additional financial burden.

~  Decreased Flexibility to Meet Customer Requirements: Meeting customer requirements is more difficult under the new HOS rules. In particular, drivers are limited to one restart per week and must take those restarts across two nighttime periods. Shippers, however, may require delivery at any point on a given day, and with little notice. The data show, particularly those data describing the variability in driver weekly work time, that flexibility has decreased. As a result, drivers are less able to accumulate hours for unanticipated shipper requests via the 34-hour restart. In many instances carriers must either turn down business or increase driver capacity.

This valuable research will likely be presented in some form at the subcommittee hearing on Thursday, November, 21. Chairman of the Subcommittee on Contracting and Workforce of the House Small Business Committee, Rep. Richard Hanna (R-NY) stated that the hearing will "examine the economic and operational impact of the FMCSA new Hours of Service regulation on small businesses". Hanna went on to add that he "looks forward to learning from the witnesses how they are operating under this rule and examining how we can better balance the needs of our economy and the important goal of highway safety." These witnesses will represent both sides of the argument as Anne Ferro of the FMCSA is scheduled to be heard alongside carrier executives from the Owner-Operator Independent Drivers Association and the American Trucking Association.

It will be interesting to see the outcome of this hearing, so stay tuned to FleetCardsUSA.com for all your industry updates.