Released: May 17, 2004

How New Hours of Service Rules Impact The Industry
When the new hours of service regulations went into effect in January, many claimed it to be the biggest change to hit the trucking industry since the Motor Carrier Act of 1980 deregulated the industry. Essentially, the new rules require drivers to operate on a 14-hour continuous workday (down one hour from the old rules) but allow them to drive one additional consecutive driving hour. However, “free” hours that drivers spent idling at loading docks will be counted as on-duty time, and this change will have the biggest impact on transportation providers. Prior to HOS regulations, drivers had the flexibility of using mid-day breaks to extend the on-duty period if things weren’t happening according to schedule. This is no longer the case.

Nobody’s exempt from the new rule. Everyone from giant truckload carriers, independent owner-operators, to regional LTL haulers and private fleets must comply. But their effects on different types of operations—and ultimately their impact on shippers—vary widely. During the NASSTRAC Shipping Strategies and Logistics Conference in April, NASSTRAC took a closer look at how the new HOS rules are having an impact on several market segments of logistics.

Impact On Trucking. LTL will gain the most business as a result of increased price pressure on the truckload sector. There are three primary reasons that could cause a shift in modes:
1. Price and cost. For truckload, the cost of stop-offs used to be a lot less than now under new HOS rules. While in many instances truckload stop-offs were cheaper than LTL, that may now have changed.
2. Business will shift from a service standpoint. To what extent will truckload carriers have to change their service commitments? And will truckload carriers go to customers and renegotiate contracts, stating they’ll only take orders of a certain size?
3. Capacity shortages may happen. Because shippers need protection and capacity, this could cause a move to LTL. In the long run, some of the volume that comes to LTL will stick and some will not.

Impact on Private Fleets
The private fleets of shippers log plenty of road time. In fact, private fleets account for approximately 53% of all the U.S. miles traveled by medium- and heavy-duty trucks, according to the National Private Truck Council. But they’re also logging plenty of time off the road, which is why they may find themselves running up against the new HOS limits. Private fleet drivers typically do much more than just haul goods from point A to B. Many of them also carry out a number of non-driving duties: including loading and unloading, setting up customer displays, and performing installation work. Now, under the new rules, these time-consuming tasks are all on the clock.

This has major implications for route drivers who make multiple delivery stops. “My gut tells me that local distribution people have been hardest hit,” says Richard Schweitzer, general counsel for the NPTC. “They don’t get the benefit of the 11-hour rule, but they’re hit by the 14-hour daily limitation. That’s mitigated by the 34-hour reset. A number of companies have said they had to hire drivers and put on additional equipment. Some large companies have said they have to hire hundreds of additional drivers.”

Impact on International
The new rules have an impact in the international arena as well. Many of the pick-up and delivery policies within the marine terminals have changed, according to Al Iannelli, Executive Vice President of H&M International Transportation who spoke at the NASSTRAC conference. “Originally, mounted containers were picked up and returned to the same marine terminals when empty,” he says. “As container volumes grew beyond the marine terminals capacity to store the empty containers, the terminals reached out to off-site locations where they had more room to store, receive and deliver the empty containers and chassis. With capacity issues in the port areas, many of the off-site container depots are becoming more and more distant from the port area. These changes in operational methods have cost the intermodal trucking industry a major loss of truck utility and driver productivity. The process adds up to additional driving time or adds on-duty time to the driver’s work day.” Remember, under the new HOS rules, all on-duty time must be consecutive.

Although it remains to be seen as to what degree the new rules will impact productivity, it’s clear that dramatic changes are already happening in these market segments of the industry. More will “shake out” as the industry operates under this changed environment created by the new HOS rules.

What Can Shippers Do To React To New HOS Rules?
The new HOS rules will have an impact on productivity and transportation costs. And shippers can help. Here are four proactive measures that shippers can take against possible rate increases as carriers react to the new HOS rules:

1. Revisit your standards and practices in relation to loading and unloading trucks on your receiving and shipping docks. Look for opportunities to eliminate driver wait time.
2. If you currently use carrier personnel for palletizing, sorting, counting, or any other function, find out the dollar value of that service. You can make a realistic cost comparison of paying higher freight rates versus performing the activities with your own staff, temporary or contract labor.
3. If you use appointment scheduling for inbound goods deliveries or outbound goods pick-up, be aware of notify-to-delivery/pickup times and make sure you’re not scheduling further out than needed.
4. For finished product delivery to your customers, develop a list of those customers that historically delay the arrival of their goods from you.

Source: Dave Bennett, Director of Transportation Cost Management Services, enVista Corp., a provider of logistics services, as quoted in Logistics Today magazine.


Average Diesel Price Continues To Increase Nationally
According to the DOE, the national average diesel price rose slightly from last week (1.8 cents to $1.763). Regions with the largest increases from last week were the New England states (from $1.678 per gallon to $1.804); the Central Atlantic (from $1.765 per gallon to $1.791); and the Rocky Mountain states (from $1.928 per gallon to $1.951).

As a service to members, NASSTRAC provides weekly fuel pricing by region.
Click here to review the DOE Fuel Price Index for the week of May 17.
Click here for the DOE Fuel Price Index History


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