Analyst: E-logs drove 2013 carrier bankruptcy spike

| June 27, 2014

Reporting from the summer CCJ symposium in La Jolla, Calif., Aaron Huff detailed the presentation of Donald Broughton, well-known among transportation professionals for his quarterly tracking of trucking bankruptcies as an economic indicator. “The 28 years of data he has collected show a very predictable formula: bankruptcies increase whenever fuel prices go up,” Huff writes. “Companies may still be marginally profitable but go broke because they run out of cash. When fuel prices go up at the same time demand drops then failures increase more dramatically. Such was the case in 2000 and in 2008.”

While failures also tend to follow a “seasonal pattern,” spiking in Q1 and tapering off through the end of the year, 2013 was an anomaly. 

“For the first time in 28 years,” Huff writes, “these formulas didn’t work. The number of bankruptcies increased every quarter as diesel prices and freight demand were steady.”

Related

More hours flexibility could ‘ease e-log angst’?

Overdrive Equipment Editor Jack Roberts asked the question in the title of a blog post on the CCJ website in which he discusses the hours flexibility issue relative to the proposed electronic logging device mandate.

“That is the exact opposite of what you would expect from normal seasonality,” said Broughton, managing director of analyst firm Avondale Partners.

When Broughton “called many of the carriers who had closed their doors last year…with few exceptions they told a similar story,” Huff writes. “At some point during the past 12-18 months they were audited by the Federal Motor Carrier Safety Administration.”

Related

ELD mandate: Independents’ final straw?

An Overdrive survey shows between 50 and 70 percent of respondents threatening to exit the industry over the electronic-log mandate -- the highest percentages are among independents/small fleets.

The FMCSA’s hard line on hours led to e-logs for those carriers to an attempt to satisfy regulators, which led to lower utilization. “With fewer miles, driver pay went down and turnover increased,” Huff writes. “In many cases the fleets did not have enough drivers to fill 10 to 15 percent of their trucks.”

Read Huff’s full report, with upsides for carriers who remain, via this link.

Stay tuned to OverdriveOnline.com in the coming weeks for a report on one small fleet that went through a similar experience but remains standing today with more than a year of e-logs on the road behind them.

  • guest

    Sure…why is this NEWS?? Its obvious a small fleet or O/O cant compete with mega fleets who do use ELOGS cheerfully..knowing full well they are driving the little guys broke. Duh…..they have 50,000 trailers being loaded as we speak….Elog is no problem…only for the small operator it is a major constraint.

  • guest

    ..as a side issue…it is reported the FBI has Busted DMV workers in El Cajon Cal. (san diego) for issuing FAKE CDL to anyone with $3K to hand over…June 14 2014……theseFake Licenses DO include Hazmat.
    This is trucking being made safe????? many of the Bribe Folks could not read or write any English…but the Crooked DMV workers eagerly issued them CDL with Hazmat for driving Tankers is they desire….these are the Cops doing a fine job screwing truckers everywhere…as usual…..this crap had gone on for 2 Years before the FBI finally busted the operation…..how MANY other illegals are sitting in truckstops with their PURCHASED CDL with HAZMAT?????

  • guest

    Elogs for the small operator is economic suicide….it works good for the mega fleets who have used them..and ran legal paper logs for years….they have made the adjustments necessary in Booking, Planning, everything including have 4 to 1 trailer to truck ratio….so the driver simply does drop and hook most of the time or has 30 minute loading guarantee from shipper and receiver on live loads….the independent small guy has ZERO chance of survival with this cop loving Tattle Tale device in his rig…..lol

  • quickphil

    Just proves what I and a few others have been saying all along ! The cost factor on a 1 to 100 trucking company is out of range for them to be competive with the MEGA carriers ! Why do you think that they have been pushing for them so hard use the Government to get rid of your competitors !

  • lastgoodusername

    It is sad to finally see a government plan working as it was designed.

  • Doing it right

    I do not understand these remarks. Donald Broughton is a trusted industry analyst. He analyzes trucking failures and looks for reasons why with no bias, these reasons should be information for others in the industry to use and avoid the same mistake. If you reread this article he said that most of the carriers that went out of business were due to having a poor DOT audit that resulted in implementation of elogs. If these carriers had been operating or attempting to operate legally this would not have occurred. Instead they chose to operate illegally when they entire industry knows that the DOT is concentrating on HOS. Additionally the article stated that carriers that converted to elogs and managed them were able to increase their utilization. We are a small fleet (175 trucks) and found this to be true after our transition. However we were operating legally and were able to make the transition on our terms and time schedule. Get with it folks and get legal. There is no difference between paper and electronic logs if you operate legally. IF you don’t, you won’t be in this industry 24 months from now and likely your drivers CSA history will be damaged to the point that they will not be able to stay in the industry either. And to all you folks that say you will hang it up at the time, I’ll bet you will singing a different tune when the time comes…

  • guest

    Very well said :Doing it Right”… Everyone knows that running outside regulation turns cash, until the offender is caught. Point being, if they had been running right in the first place there’s no need for an audit, and continual improvement continues. This argument about e-logs has more to do with a lack of desire to run right than it does what e-logs would do. Electronic logs are a tool, like anything else if one doesn’t learn how to use the tool, and improve one’s self we can’t expect good results. The industry as a whole needs to buckle down and fly right so we can all address realistic HOS regulation that works for everybody.

  • Jammer

    What about the guys/gals that ARE doing it right, and will be forced to have e-logs? I own ONE truck, I use paper logs and run like I should. NEVER run when I’m about to fall asleep, NEVER! So how is it FAIR that I have to add another cost to my when EVERYTHING ELSE is sucking most of my profit up. He ALSO said that after they went on E-logs they couldn’t compete with the maga companies , because they were too small. ONE SIZE Don’t fit ALL!

  • Hailee

    We are a small carrier been using e logs for 7+ years and productivity utilization and fuel economy are all up…..

  • Gary

    You say you are a small carrier doing just fine.Well try being a steel hauler and sit in a mill for 4 to 6 hrs loading . It doesn’t work .

  • shadow hauling

    Same thing happened with in the last year here in NYS. Those that had the money could pass.

  • shadow hauling

    nope I won’t. I’m already looking for a job working in a warehouse . That way I can screw the big carriers back.

  • shadow hauling

    Well when the small companies are run out of business and there are only the bigger ones left guess who the US government is going to be picking on ? When the time comes all you that think adding this and that and putting this and that reg in place remember, I TOLD YOU SO ! They won’t stop because they need and like their jobs also and have to eat. Sorry for the companies and drivers that will be run out of business. Maybe I should write down that lawyers phone number that hates truck drivers so when one of the big company drivers that is left gets disgruntled for not getting miles or hours because of the regulations and losses pay and runs into me I can finally make a living. Sorry but I’m PISSED !

  • Patty Cakes

    You got me pissin’ myself laughin’ … ‘ Sir ‘ !

    Think we’re all blind ?

  • josh

    I’m 35 years old and an owner operator. Sometimes I feel like I wish I was close to retirement so I could avoid this. I shouldn’t think that way because I’m a young guy who would like to continue in this field but I know e
    logs arent going to work for me unless there is some sort of flexibility. I am too independent and there are too many variables involved.

  • manyguestprease

    And what do you have to say to the small companies using elogs and running reefer? Those guys are sitting in a dock a hell of a lot longer than 4-6 hours at a time, a lot of the time. I’ve sat in a reefer dock for 20 hours at some points.

  • guest

    Now this is a different “guest” than me….Elogs are idiotic and unnecessary tattle tale devices….in my opinion….you constantly have to answer to the stupid Elog device…we all got alongjust fine before this P.O.S. came along…..the butt kissers want to “do things right” ..how funny…probably cant drive worth a damn…lots of us dont NEED babysitting….

  • guest

    I agree…this Elog willmake you a Slave to it.
    It wont work unless you have trailers dropped everywhere like a mega fleet….You will go Broke in a hurry…

  • guest

    Yep You can kiss butt all day….all this Cop dominated bullcrap is for a Bootlicker….you stick around and enjoy…..guys with brains left along time ago….You should “get with it”….

  • guest

    Cops are doing a fine job….letting these MVR clerks get rich handing out licenses for Money to illegals…….

  • jojo

    Drivers break the law to increase their income. The national annual average income for a Driver is 36 to 38 thousand dollars.
    Time is relevant. Convert from a piece work system to a time based system that pays a reasonable and fair rate to Company OTR Drivers. By doing so these Drivers will no longer need to race the ELD in order to make a living.
    A starting salary of $1,392.00 for a maximum of 70hrs worked in 8 days is What a new and inexperienced Driver should be earning.
    Pat Hockaday jojo859585@gmail.com

  • brad

    I have a friend that had fifty trucks on the road before this mandate they are pushing down our throats.Now he has ten trucks on the road.For those that comment on how well it worked for a two hundread truck fleet please sit back and think of the less than fifty truck fleet that really has no bargaining power against a bigger company where the more you buy the cheaper it gets.Finding great drivers is hard for all companies so this csa crap has done nothing but put all owner operators in a bad light just because of a lack of being pulled enough for inspections when you have only one truck.The big carriers are getting what they want.All small business owner operators out of the game.IT’s not just one expense that puts an owner out of business.It’s when you put them all together that people go under.It was my dream to own my truck and do it my way but I am not sure now if I can make money and retire doing this anymore.I don’t want to do this for free and give all the profit to endless regulations.

  • bigred

    I have been commenting on the effect of E-logs from the start..If you don`t have 100 wagons to drop and hook it will put you out of business….Everyone has seen companies swapping trailers simply because they have no flexibility with the current E-log/14 hour rule.

  • Patty Cakes

    Truck Nazi’s all parrot exactly what the latest Speaker told them at the last FMCSA ‘ How to Rape the Industry ‘ round-table, in attempt to justify their paycheck.

    What he meant by ” We are a small fleet “, is a small fleet of DOT Inspectors + Scale-house operators.

  • jerry

    It is obvious these companies need to be off the road. Elogs mean they have to log legal thus playing by the rules. If their revenues decreased as a result of less miles than their drivers were driving in excess of legal hours, were most likely fatigued and unsafe. It was unsafe issues that led to the audits in the first place. The highways are safer without those who run illegally and it makes life better for us owner operators who play by the rules.

  • jerry

    My productivity has increased with elogs. I find that 98% of those making comments like those posted on here have never even seen an elogs much less used them. And look at it like this. If all were obeying the rules we have rather than logging illegally we would not be having a discussion about elogs. If you race in NASCAR and break the rules you get penalized. If you break the rules in the NFL you get penalized. Elogs are a penalty if you break the rules in trucking. If all were mature enough to live by the rules we would not be having this discussion.

  • guest

    Yep…dispatchers and dot cops get on here just to piss off truckers…talking about how”successful” they are with this NEW COP DOMINATED TRUCKING…and how WE should stop complaining???? The Boston Tea Party guys did MORE than complain……these RICH execs are in LA JOLLA??? At an EXPENSIVE resort??? Must beNice??

  • guest

    “Doing it right” is code for Kissing every Cop Ass you can find….and licking Boots of dispatchers and shippers till your blue in the face…lol

  • guest

    I’m really glad to hear that their are folks on this forum that understand and want to run a compliant company or drive their truck in compliance and position themselves for a positive future. Those that don’t, I wish you could sit back with an objective mind and listen to what you are really saying. Your are saying that you your business model (or lack of )doesn’t allow you to operate in the future. And, you are wrong, it does not take a 4-1 trailer ratio to keep the productivity up in anyone’s fleet. It takes, planning from the load planners, the fleet manager and the drivers. If anyone in that group fails to plan it will not work, most times it is the driver who is bucking the system and hurting themselves only to blame it on the government. Also, to the ones that talk about the time wasted at shippers and receivers, guess what, that is off duty time, get your 10 hour break in if you are at a slow shipper or receiver and roll with a full clock. WAKE UP! Don’t allow your selves to fall the way of the dinosaurs. You are hurting the industry and yourselves.

  • jojo

    We are already being tracked and monitored in a non-evasive manner. Those of us who know the real deal are already logging responcibly.
    Many have given everything so that we may enjoy liberty. It is unjust to place an ELD in my truck without my consent and then to make me pay for it.
    I have to much to lose to ever run outlaw again and now I must prove myself innocent instead of them proving me guilty.
    I will lose money with the speed limiter! I only lose dignity and self respect with an ELD! I much prefer the speed limiter!
    Pat Hockaday
    A Man is only as good as his Word

  • KLN

    It doesn’t mean you run illegally if you don’t want the ELD, For a
    single truck o/o, the added expense for the ELD is what the problem
    is….it’s hard enough with the fuel prices, maintinence, etc. the
    concern is the cost of using them.

  • Charlie

    Why don’t you take your elogs and ride on. I am sick of people forcing their opinions on everybody else. If you like your elogs, keep’um. Your company should be charging you the fee they have to pay to watch over you. I don’t want them and I “do it right”. I run legal without an elog (babysitter).. It should be a choice. If you think it’s about safety, it’s not. IT’S ABOUT MONEY. Purchase, install, monitoring fees and kickbacks to the ones that got pushed through. Take your blinders off. Nobody at the FMCSA cares about your safety.

  • Jimmy the Greek

    in 4 years i well be 66 , FYI a small fleet is not 175 trucks it would be 3 to 10 trucks .

  • guest

    Compliant with what?? a bunch of bullcrap NEW RULES imposed in the last few years?? And NOW some dumbass Monitoring Device to ENFORCE the Bullcrap Rules?? truckers got along Fine without this NEW TRUCKING agenda…..why “comply” with Bullcrap? Only a mega Fleet has all these resources you mention to “make it work”. Only the RICH will survive this onslaught of Regs and Monitoring Devices that enforce the REGS..that are Drawn Up by wealthy Lobbyists in Washington who represent RICH mega fleets…get a clue.

  • guest

    Yep…no trucker is TRYING to be unsafe or kill himself…and would prefer to get a night’s sleep like anybody else….just because we DONT want a stupid electo Log this makes us OUTLAWS??? How stupid can you get???

  • guest

    “doing it right” is some ignorant yuppie Cliche phrase that means Comply, Conform, Obey to rules made up by desk jockeys in Washington….what a silly bunch of Crap….

  • guest

    You say “if you are Obeying”….like a good little Bootlicker and Buttkisser?? And 9 year old???? YOU obey, conform, comply and kiss ass whike they heapMORE and MORE rules on you….lol

  • guest

    yep..play by the RULES being drawn up by mega Fleets as they lobby in Washington….to drive all independents Out Of Business…..obey, comply, conform…….dont you every get sick of butt kissing and being ordered around like a CHUMP??

  • Charlie

    Please explain how an elog can aid productivity and fuel economy ? Please.

  • Charlie

    Company drivers will never understand that KlLN. They cannot see past their meager paycheck at the end of the week. They are just happy to be holding onto their steering wheel and playing truck driver.

  • Charlie

    How did your productivity increase with elogs? Can someone please explain this to me. Is it because you speed through construction zones and towns to make up time or what. If elogs are the same as paper and you run legal on both. How the …..do you increase productivity?

  • Guarded

    Jammer, Please try “Big Road”. It’s a free app for a smart phone to do ALL your HOS procedures and it’s simple to use (I’ll never use paper logs again). The program is DOT approved and you can print it or email every days log wherever needed. I’ve been through my safety audit AND roadside audits and passed with flying colors. Soooo much easier to use and can be set to operate off your phones GPS so it starts automatically when you are moving. Check it out! Chances are you already have a smart phone so it’s free to download and use if you’re an o/o with one truck and fairly priced for a fleet.

  • Paladin

    Not to mention the fact Elogs are a violation of our Civil Rights. Wonder if the ACLU will take my case?

    I say EOBR ARE UNCONSTITUTIONAL violating the fourth, fifth and fourteenth amendments to the US Constitutiion.

  • rydermike

    The major problem with elogs is more because of the inflexibility of the 14 rule. Drive to a shipper , take a 10 hour break outside the gate , go I at 8am for the appointment , within 15 minutes be I the dock , 2 1/2 hours later your paper work and count is done ad you are free to go …… with 3 hours already burned from available hours , and you very well might had spent most of that time at the dock in the bunk!

  • Indie Trucker

    I run 100% legal on paper logs, call it BS if you want, but I know its coming, so a long time ago decided to “log it like I run it”. Its worked just fine for me. That being said, I agree with the notion that a lot of guys are not going to be able to make it once they are forced to run electronic logs. They aren’t going to be able to go home as much as they once did, and they aren’t going to make as much money as they once did. The change is coming, its inevitable unless Congress decides to act (since they mandated it in MAP-21, wishful thinking) and the sooner you learn how to adapt, the better off you are going to be.

  • truckboner

    How?